Question

In: Finance

Marlene Bellamy purchased 400 shares of Writeline Communications stock at $ 56.26 per share using the...

Marlene Bellamy purchased 400 shares of Writeline Communications stock at $ 56.26 per share using the prevailing minimum initial margin requirement of 60 % . She held the stock for exactly 6 months and sold it without any brokerage costs at the end of that period. During the 6 ​-month holding​ period, the stock paid $ 1.63 per share in cash dividends. Marlene was charged 7.2 % annual interest on the margin loan. The minimum maintenance margin was 25 % .

d. ​(1) If the sale price at the end of the 6-month holding period is $50.19, the​ Marlene's annualized rate of return is?
(2) If the sale price at the end of the 6-month holding period is $60.57, the​ Marlene's annualized rate of return is?
​(3) If the sale price at the end of the 6-month holding period is $70.46, the​ Marlene's annualized rate of return is?

Solutions

Expert Solution

jeff jeffy answered 10 months ago
Next > < Previous

Related Solutions

An investor buys 400 shares of stock selling at $70 per share using a margin of...
An investor buys 400 shares of stock selling at $70 per share using a margin of 40%. The stock pays annual dividends of $2 per share. A margin loan can be obtained at annual interest cost of 6%. Determine what return on invested capital the investor will realize if the price of the stock increases to $94 within twelve months. A. 33.54% B. 34.29% C. 37.14% D. 55.90% E. 83.86%
Suppose that LMN stock currently is selling at $48 per share. You buy 400 shares using...
Suppose that LMN stock currently is selling at $48 per share. You buy 400 shares using $14,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 5%. a. What is the percentage increase in the net worth of your brokerage account if the price of LMN immediately changes to: (i) $51.36; (ii) $48; (iii) $44.64? What is the relationship between your percentage return and the percentage change in...
An investor purchased 550 shares of stock A at $22.50 per share and 1,050 shares of...
An investor purchased 550 shares of stock A at $22.50 per share and 1,050 shares of stock B at $30.50 per share one year ago. Stock A and stock B paid quarterly dividends of $2.50 per share and $2.00 per share, respectively, during the year. One year later, the investor sold both stocks at $30.50 per share. The correlation coefficient (ρAB) is 0.3 and the standard deviations of stock A and stock B are 20.5 percent and 15.5 percent, respectively....
Sara Sanders purchased 30 shares of Apple stock at $189.15 per share using the prevailing minimum...
Sara Sanders purchased 30 shares of Apple stock at $189.15 per share using the prevailing minimum initial margin requirement of 59%. She held the stock for exactly 4 months and sold it without any brokerage costs at the end of that period. During the 4​-month holding​ period, the stock paid $1.41 per share in cash dividends. Sara was charged 5.6% annual interest on the margin loan. The minimum maintenance margin was 25%. a. Calculate the initial value of the​ transaction,...
6. Sara Sanders purchased 30 shares of Apple stock at $189.29 per share using the prevailing...
6. Sara Sanders purchased 30 shares of Apple stock at $189.29 per share using the prevailing minimum initial margin requirement of 51%. She held the stock for exactly 5 months and sold it without any brokerage costs at the end of that period. During the 5​-month holding​ period, the stock paid $1.37 per share in cash dividends. Sara was charged 4.8% annual interest on the margin loan. The minimum maintenance margin was 25%. a. Calculate the initial value of the​...
Sara purchased 50 shares of Apple stock at $190.97 per share using the prevailing minimum initial...
Sara purchased 50 shares of Apple stock at $190.97 per share using the prevailing minimum initial margin requirement of 55%. She held the stock for exactly 4 months and sold it without any brokerage costs at the end of that period. During the 4​-month holding​ period, the stock paid $1.49 per share in cash dividends. Sara was charged 4.8% annual interest on the margin loan. The minimum maintenance margin was 25%. a. Calculate the initial value of the​ transaction, the...
Sara Sanders purchased 40 shares of Apple stock at $189.98 per share using the prevailing minimum...
Sara Sanders purchased 40 shares of Apple stock at $189.98 per share using the prevailing minimum initial margin requirement of 51 %. She held the stock for exactly 6 months and sold it without any brokerage costs at the end of that period. During the 6​-month holding​ period, the stock paid $ 1.36 per share in cash dividends. Sara was charged 5.6 % annual interest on the margin loan. The minimum maintenance margin was 25 % a. Calculate the initial...
Sara purchased 50 shares of Apple stock at $190.97 per share using the prevailing minimum initial...
Sara purchased 50 shares of Apple stock at $190.97 per share using the prevailing minimum initial margin requirement of 55%. She held the stock for exactly 4 months and sold it without any brokerage costs at the end of that period. During the 4​-month holding​ period, the stock paid $1.49 per share in cash dividends. Sara was charged 4.8% annual interest on the margin loan. The minimum maintenance margin was 25%. a. Calculate the initial value of the​ transaction, the...
Lisa Lasher buys 400 shares of stock on margin at $21 per share. If the margin...
Lisa Lasher buys 400 shares of stock on margin at $21 per share. If the margin requirement is 70 percent, how much must the stock rise for her to realize a 40-percent return on her invested funds? (Ignore dividends, commissions, and interest on borrowed funds.) Round your answer to the nearest cent.
An investor purchased 200 shares of stock at $100 per share on 65% margin. Suppose the...
An investor purchased 200 shares of stock at $100 per share on 65% margin. Suppose the maintance margin is 40% at what price does the investor get a margin call? Regarding the previous question, if the price declines to $70 per share whats the return to the investors equity? What if the stock price rises to $150 per share? ignore interest and transaction costs.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT