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Assume you want to buy 100 shares of stock at $50 per share because you feel it will rise to $75 within 3 months. The
Assume you want to buy 100 shares of stock at $50 per share because you feel it will rise to $75 within 3 months. The stock pays $4 per share in annual dividends, and during your 3-month holding period, you will receive a fourth of that amount or $1 per share. You are going to buy the stock with 60% margin and will pay 10% interest on the margin loan. Calculate the return if the price indeed go up to $75 in 3 months
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