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Question
At the beginning of 2010, Steve purchased ACME stock on margin. The initial margin requirement is 50 percent and the broker loan rate is 8 percent. Steve invested $15,000 of his own funds and margined the maximum amount allowed by the broker to purchase ACME stock. At the time, the purchase price of the stock was $25 a share. No dividends were paid during the year, and the stock was sold for $32 a share at the end of the 2010. What is the one-year holding period return for this investment?
a. 28.0%
b. 56.0%
c. 24.0%
d. 40.0%
e. 48.0%
Answer
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Related questions
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