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Calculating profits on margined and unmargined investments. Claire Gerber wants to buy 3 0 0 shares of Google, which is selling in the market for
Calculating profits on margined and unmargined investments. Claire Gerber wants to
buy shares of Google, which is selling in the market for $ a share. Rather than
liquidate all her savings, she decides to borrow through her broker at percent a year.
Assume that the margin requirement on common stock is percent. If the stock rises to
$ a share over the next year, calculate the dollar profit and percentage return that Claire
would earn if she makes the investment with percent margin. Contrast these figures to
what she'd make if she uses no margin.
Calculating return on investment. Which of the following would offer the best return on
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