An Investor Buys 16 000 Worth Of A Stock Priced At 20 Per Share Using 60 Initial

An investor buys $16,000 worth of a stock priced at $20 per share using 60% initial margin. The broker charges 8% on the margin loan and requires a 35% maintenance margin. The stock pays a $0.50 per share dividend in one year and then the stock is sold at $23 per share. What was the investor’s rate of return?

Prof. Angela


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