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Harmony Shadwell wants to buy 900 shares of Google, which is currently selling in the market...

Harmony Shadwell wants to buy 900 shares of Google, which is currently selling in the market for $24 a share. Rather than liquidate all her savings, she decides to borrow through her broker. Assume that the margin requirement on common stock is 50%. If the stock rises to $34 a share by the end of the year, show the dollar profit and percentage return that Harmony would earn if she makes the investment with 50% margin. Contrast this to what she'd make if she uses no margin. Assume 9% interest on the borrowed money.

Calculate the dollar net Profit. Round the answers to the nearest dollar.

Without Margin With 50% Margin
$ 9000 $ _____

Calculate the return on investment. Round the answers to two decimal places.

Without Margin With 50% Margin
42% ____ %

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jeff jeffy answered 2 years ago
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