Question

Suppose you have purchased 1,000 BHP common stocks in Australia since August 2019. (students are required to get the relevant data by themselves)

1. Please list the monthly closing prices of BHP common stock in Australia from August 2019 to July 2020. Using the monthly closing prices to calculate:

2. The holding period rate of return from August 2019 to July 2020.

3. The holding period rate of return from August 2019 to July 2020, if you use a margin account with 40% of initial margin (ignore the interest paid on margin loans).

The holding period rate of return from August 2019 to July 2020 if you purchased only 500 BHP common stocks.         

Answer 1

MONTH	Monthly Closing Price
Aug-19	36.43
Sep-19	36.59
Oct-19	35.5
Nov-19	38.05
Dec-19	38.92
Jan-20	38.03
Feb-20	33.09
Mar-20	29.95
Apr-20	31.25
May-20	35
Jun-20	36
Jul-20	36.88
Return	0.012352457

1000 stocks bought on Aug-19 is at 36.43 = 36430 , Jul 20 value becomes 36880 , return is 1.2 Percentage or

36880-36430 = 450

If you use 40% margin , invested amount will be .40*36430 = 14572 , Jul 20 Value is 36880 , Holding Period Return = (36880-14572)/14572*100 = 22308/14572*100 = 1.53*100= 153 %