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You want to buy 100 shares of stock at RM50 per share because you feel it will rise to RM75 per share within four months.
You want to buy 100 shares of stock at RM50 per share because you feel it will rise to RM75 per share within four months. The stock pays RM2 per share in annual dividends. You are going to buy the stock with 70% margin and will pay 10% p.a. interest on the margin loan. What is the annualized rate of return of this margin transaction if you sell that 100 shares after four months?
a. 71.79%
b. 215.7%
c. 287.16%
d. 71.9%
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