Question
Suppose you purchase 1,250 shares of stock at $51 per share with an initial cash investment of $31,875. The call money rate is 5 percent
Suppose you purchase 1,250 shares of stock at $51 per share with an initial cash investment of $31,875. The call money rate is 5 percent and you are charged a 1.5 percent premium over this rate. Ignore dividends. a. Calculate your return on investment one year later if the share price is $59. Suppose instead you had simply purchased $31,875 of stock with no margin. What would your rate of return have been now? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) b. Calculate your return on investment one year later if the share price is $51. Suppose instead you had simply purchased $31,875 of stock with no margin. What would your rate of return have been now? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) c. Calculate your return on investment one year later if the share price is $35. Suppose instead you had simply purchased $31,875 of stock with no margin. What would your rate of return have been now? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
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