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Assume that you can buy U.S. Coal for $20 per share, either paying cash or buying on margin. The initial margin requirement is 50 percent,
Assume that you can buy U.S. Coal for $20 per share, either paying cash or buying on margin. The initial margin requirement is 50 percent, and the maintenance margin is 30 percent. U.S. Coal pays $0.25 per share in annual dividends. The margin interest cost is 6 percent. Using the spreadsheet format illustrated, calculate the $ gain or loss on both a cash basis and on a margin basis for 100 shares assuming possible ending prices for the stock as illustrated. The projected holding period is six months. Also calculate the percentage gain or loss on the initial investment for both a cash basis and a margin basis. Note that the holding period is expressed as part of a year
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