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(ii) Assume you purchased the shares of the XYZ company listed on the GSE for GHS 10.00 per share. Assume margin trading is allowed and
(ii) Assume you purchased the shares of the XYZ company listed on the GSE for GHS 10.00 per share. Assume margin trading is allowed and that the margin requirement is 50%, meaning one can pay 50% of the value of shares bought and the remaining amount is paid with borrowed funds arranged by your broker at 25% per annum. As it is the case, a commission of 2.5% is attracted for purchases and sale of shares on the GSE. Assume in the course of the year XYZ paid dividend of GHS0.5 per share. If the investor sold his shares in XYZ at the end of one year for GHS16.5, calculate (a) the return on the equity of the investor (b) the return on the investment of this investor. (6 marks)
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