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In: Finance

Suppose you buy 200 shares of stock ABC at $50 per share and sell it in...

  1. Suppose you buy 200 shares of stock ABC at $50 per share and sell it in a year. The initial margin is 40%. The call money rate is 7%. One year later, stock price decreases 20% to $40. What's the rate of return of buying on margin?

    A.

    -57.5%
    B.

    -60.5%
    C.

    -62.5%
    D.

    -70%

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Expert Solution

jeff jeffy answered 2 months ago
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