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Calculating profits on margined and unmargined investments Claire Gerber wants to buy 200 shares of Google, which is selling in the market for $537.27 a

Calculating profits on margined and unmargined investments

Claire Gerber wants to buy 200 shares of Google, which is selling in the market for $537.27 a share. Rather than liquidate all her savings, she decides to borrow through her broker at 5 percent a year. Assume that the margin requirement on common stock is 50%. If the stock rises to $625 a share over the next year, calculate the dollar profit and percentage return that Claire would earn if she makes the investment with 50% margin. Contrast these figures to what she'd make if she uses no margin.

Calculate the dollar net profit. Round the answers to the nearest dollar.

Without Margin With 50% Margin
$ ____________ $_____________

Calculate the return on investment. Round the answers to two decimal places.

Without Margin With 50% Margin
%____________ %_____________

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