Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You've just opened a margin account with $15,000 at your local brokerage firm. You instruct your broker to purchase 800 shares of Landon Golf stock,

image text in transcribed

You've just opened a margin account with $15,000 at your local brokerage firm. You instruct your broker to purchase 800 shares of Landon Golf stock, which currently sells for $54 per share. Suppose the call money rate is 5 percent and your broker charges you a spread of 1.25 percent over this rate. You hold the stock for 6 months and sell at a price of $61 per share. The company paid a dividend of $0.61 per share the day before you sold your stock. 1. What is your total dollar return from this investment? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Dollar return 2. What is your effective annual rate of return? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Effective annual return %

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

Entrepreneurial Finance

Authors: J. Chris Leach, Ronald W. Melicher

6th edition

1305968352, 978-1337635653, 978-1305968356

More Books

Students also viewed these Finance questions