Question
Which of the following would offer the best return on investment? Assume that you buy $7,000 in stock in all three cases, and ignore interest
Which of the following would offer the best return on investment? Assume that you buy $7,000 in stock in all three cases, and ignore interest and transaction costs in all your calculations. Buy a stock at $65 without margin and sell it 1 year later at $85. Buy a stock at $45 with 50% margin and sell it 1 year later at $50. Buy a stock at $55 with 75% margin and sell it 1 year later at $70.
A) Buy a stock at $65 without margin and sell it 1 year later at $85.
B) Buy a stock at $45 with 50% margin and sell it 1 year later at $50.
C) Buy a stock at $55 with 75% margin and sell it 1 year later at $70.
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