Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The current market price for XYZ is $55 per share. Initial margin is 50%, maintenance margin is 35% and margin interest is 1.75% per year.XYZ

The current market price for XYZ is $55 per share. Initial margin is 50%, maintenance margin is 35% and margin interest is 1.75% per year.XYZ pays annual cash dividends of $2.15 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 $65 per share at the end of the year. What is your percentage return on assets for this trade?Enter your answer rounded to two decimal places.Do not enter % in the answer box.For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Theory And Practice

Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason

3rd Canadian Edition

017658305X, 978-0176583057

More Books

Students also viewed these Finance questions