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Assume that an investor purchased 500 shares of Newco's stock. The shares were trading at $50 when the transaction was executed. Assume the investor was
Assume that an investor purchased 500 shares of Newco's stock. The shares were trading at $50 when the transaction was executed. Assume the investor was able to sell the shares for $100. To determine the effect of the leverage with purchasing the shares on margin, compute the return on the transaction if (1) no margin was used and (2) 70% initial margin requirement was used. Assume no transaction costs. 22. Rate of return if no margin was used 23. 70% Maintenance Margin Requirement
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