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Question
An investor buys $16,000 worth of a stock priced at $20 per share using 60% initial margin. The broker charges 8% on the margin loan and requires a 35% maintenance margin. The stock pays a $.50-per-share dividend in 1 year, and then the stock is sold at $23 per share. What was the investor's rate of return?
A. 17.5%
B. 19.67%
C. 23.83%
D. 25.75%
Answer
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Related questions
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Which of the following does not approximate the performance of a buy-and-hold portfolio strategy?
A. An equally weighted index
B. A price-weighted index
C. A value-weighted index
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B. $37,500
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Q:
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Q:
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Q:
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Q:
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Q:
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Q:
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Q:
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Q:
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D. The answer cannot be determined from the information given.