Question
Youve 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,
Youve 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 $62 per share. Suppose the call money rate is 5.5 percent and your broker charges you a spread of 1 percent over this rate. You hold the stock for 6 months and sell at a price of $69 per share. The company paid a dividend of $0.53 per share the day before you sold your stock. a) What is your total dollar return for this investment? b) What is your effective annual rate of return?
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