Question
You have just bought on margin 100 shares of IBM Corp. common stock for $108 per share. One year from now you expect to sell
You have just bought on margin 100 shares of IBM Corp. common stock for $108 per share. One year from now you expect to sell the stock for $140. The interest charge on the margin loan will be 9%. What percentage rate of return do you expect to earn on your investment? (ignore commissions, Assume the maximum permissible amount of margin debt)
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Case Studies in Finance Managing for Corporate Value Creation
Authors: Robert F. Bruner, Kenneth Eades, Michael Schill
7th edition
007786171X, 77861711, 978-0077861711
