Question
Youve just opened a margin account with $20,160 at your local brokerage firm. You instruct your broker to purchase 1,200 shares of Landon Golf stock,
Youve just opened a margin account with $20,160 at your local brokerage firm. You instruct your broker to purchase 1,200 shares of Landon Golf stock, which currently sells for $28 per share. Suppose the call money rate is 7 percent and your broker charges you a spread of 1 percent over this rate. You hold the stock for five months and sell at a price of $35 per share. The company paid a dividend of $0.47 per share the day before you sold your stock. a. What is your total dollar return from this investment? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is your effective annual rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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