Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You just bought 1 , 0 0 0 shares of stock in The John Deere Company on margin. You paid $ 5 2 5 a

You just bought 1,000 shares of stock in The John Deere Company on margin. You paid $525 a share, so the total value of the transaction we $525,000. $300,000 of the amount was paid for with cash in the account, and you borrowed $225,000 from your broker to complete the purchase. The broker loan rate is 10%.
One year later, you sold the stock for $500. Over the course of that year, you collected $40.00 a share in dividends. Your income tax rate is 25%.
How much did you make in percentage terms after tax?
-1.750%
-8.333%
13.333%
5.000%

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_2

Step: 3

blur-text-image_3

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

Lectures On Public Economics

Authors: Anthony B. Atkinson, Joseph E. Stiglitz

1st Edition

0691166412, 978-0691166414

More Books

Students also viewed these Finance questions