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

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%

Solutions

Expert Solution

jeff jeffy answered 2 weeks ago

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Subjects

	A.	-57.5%
	B.	-60.5%
	C.	-62.5%
	D.	-70%