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You have deposited $30,000 in a brokerage account with an initial margin of 60%. The broker...

You have deposited $30,000 in a brokerage account with an initial margin of 60%. The broker charges a spread of .5 percent and the call money rate is 5.5%. If IBM shares are currently traded at $50, how many shares of IBM can you purchase? A year later, IBM shares are being traded at $60 and you sell your IBM stocks. Calculate your rate of return. What would have been your rate of return if you had purchased IBM using a cash account instead? What would have been your rate of return if , a year later, IBM stock were being traded at $40 per share- with and without a margin loan? What would you conclude? (assume IBM did not pay any dividends)

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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