Question
Jill purchased 100 shares of ABC stock at $22 a share. On the same day, her twin sister Jan also purchased 100 shares of ABC
Jill purchased 100 shares of ABC stock at $22 a share. On the same day, her twin sister Jan also purchased 100 shares of ABC stock at $22 a share. Jill paid cash for her purchase while Jan used margin. The broker has a 70 percent initial margin and a 35 percent maintenance margin on this stock. Both Jill and Jan sold their shares after 7 months at a price of $26 a share. The stock pays no dividends. Jill had a holding period percentage return of _____ percent as compared to Jans _____ percent return. Ignore margin interest and trading costs.
a. 18.18; 18.18
b. 18.18; 25.97
c. 18.18; 30.30 1
d. 19.99; 25.97
e. 19.99; 30.30
The answer is b , why and how?
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