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The current market price for XYZ is $177 per share. Initial margin is 50%, maintenance margin is 35% and margin interest is 1.75% per year.
The current market price for XYZ is $177 per share. Initial margin is 50%, maintenance margin is 35% and margin interest is 1.75% per year. XYZ pays annual cash dividends of $5.95 per share. You believe the stock price will increase over the next year and wish to trade long using margin. Suppose you are correct and the stock rises to $188 per share at the end of the year. 1.What is your percentage return on equity for this trade? 2.What is your percentage return on assets for this trade?
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