Question

In: Finance

You purchase 120 shares for $70 a share ($8,400), and after a year the price falls...

You purchase 120 shares for $70 a share ($8,400), and after a year the price falls to $65. Calculate the percentage return on your investment if you bought the stock on margin and the margin requirement was (ignore commissions, dividends, and interest expense):

  1. 15 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place.

      

  2. 65 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place.

      

  3. 75 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place.

      

Solutions

Expert Solution

jeff jeffy answered 10 months ago
Next > < Previous

Related Solutions

You purchase 200 shares for $70 a share ($14,000), and after a year the price falls...
You purchase 200 shares for $70 a share ($14,000), and after a year the price falls to $65. Calculate the percentage return on your investment if you bought the stock on margin and the margin requirement was (ignore commissions, dividends, and interest expense): 25 percent. 40 percent. 75 percent.
You purchase 50 shares for $50 a share ($2,500), and after a year the price falls...
You purchase 50 shares for $50 a share ($2,500), and after a year the price falls to $40. Calculate the percentage return on your investment if you bought the stock on margin and the margin requirement was (ignore commissions, dividends, and interest expense): 25 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place.   % 65 percent. Use a minus sign to enter the amount as a negative value. Round...
Suppose you purchase 80 shares of Eagle inc. at a price of $85.68 per share using...
Suppose you purchase 80 shares of Eagle inc. at a price of $85.68 per share using 50% margin. Your annual interest rate is 8%. After 4 months, Eagle inc. is now at a price of $122 per share, and has paid one dividend of $1 per share. What is your 4-month return on this margin purchase? Assume you pay 4/12 of the annual interest.
You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate...
You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate is 5% continuously compounded. The margin loan is $50,000. You want to analyze your potential returns under three scenarios for MSFT’s stock price over the next year: i) $120/share ii) $150/share iii) $180/share Fill in the table below to show your work. Current Value MSFT Stock Price 1-year Later $120/share $150/share $180/share Asset Margin Loan Equity % Return
The shares of XYZ Inc. are currently selling for $120 per share. The shares are expected...
The shares of XYZ Inc. are currently selling for $120 per share. The shares are expected to go up by 10 percent or down by 5 percent in each of the following two months (Month 1 and Month 2). XYZ Inc. is also expected to pay a dividend yield of 2 percent at the end of Month 1. The risk-free rate is 0.5 percent per month. What is the value of an American call option on XYZ shares, with an...
The shares of XYZ Inc. are currently selling for $120 per share. The shares are expected...
The shares of XYZ Inc. are currently selling for $120 per share. The shares are expected to go up by 10 percent or down by 5 percent in each of the following two months (Month 1 and Month 2). XYZ Inc. is also expected to pay a dividend yield of 2 percent at the end of Month 1. The risk-free rate is 0.5 percent per month. a.       What is the value of an American call option on XYZ shares, with...
You purchase apple stock today at a price of $200. After a year it has declined...
You purchase apple stock today at a price of $200. After a year it has declined to $150 but paid a $20 dividend, what is the annual return on your purchase? -25% -15% 15% 25% 47%
Dinklage Corp. has 4 million shares of common stock outstanding.The current share price is $70,...
Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $70, and the book value per share is $9. The company also has two bond issues outstanding. The first bond issue has a face value of $75 million, a coupon rate of 7 percent, and sells for 95 percent of par. The second issue has a face value of $60 million, a coupon rate of 6 percent, and sells for 107 percent of par. The...
Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $70,...
Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $70, and the book value per share is $9. The company also has two bond issues outstanding. The first bond issue has a face value of $75 million, a coupon rate of 7 percent, and sells for 95 percent of par. The second issue has a face value of $60 million, a coupon rate of 6 percent, and sells for 107 percent of par. The...
Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $70,...
Dinklage Corp. has 4 million shares of common stock outstanding. The current share price is $70, and the book value per share is $9. The company also has two bond issues outstanding. The first bond issue has a face value of $75 million, a coupon rate of 7 percent, and sells for 95 percent of par. The second issue has a face value of $60 million, a coupon rate of 6 percent, and sells for 107 percent of par. The...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT