Question
Mary buys 50 shares of XYZ stock for $80 per share. A year after, she sells the stock at $100 per share. (1) If she
Mary buys 50 shares of XYZ stock for $80 per share. A year after, she sells the stock at $100 per share.
(1) If she uses cash for this investment, what is the % return?
(2) If she uses her margin account with a 60% margin, what is her % return?
Now assume she sells at a loss at $60 per share,
(3) What is her % loss if it is a cash investment, and
(4) What is her % loss if it is a margin investment with a 60% margin?
Please ignore all commissions and fees in this problem.
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Fundamentals Of Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
5th Edition
0135811600, 978-0135811603
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