Question
Suppose that you opened a margin account (margin requirement = 60%) with your brokerage firm. Through this account, you invested in 100 shares of Mercer
Suppose that you opened a margin account (margin requirement = 60%) with your brokerage firm. Through this account, you invested in 100 shares of Mercer Inc. stocks at $80 per share two years ago. While you hold the stocks (2 years = 8 quarters), the firm paid out $1.00 dividend per share every quarter. If you sell the stocks at $90 per share today, what is the percentage return for your investment? Assume that the commission rate is 5 percent of the purchase and sale price, and you need to pay 10% interest compounding on the borrowed fund every year.
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