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You’ve just opened a margin account with $16,000 at your local brokerage firm. You instruct your...

You’ve just opened a margin account with $16,000 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 6 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. 1. What is your total dollar return from this investment? 2. What is your effective annual rate of return?

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jeff jeffy answered 3 weeks ago
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