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Problem 2-3 Margin Return (LO3, CFA4) You purchase 600 shares of 2nd Chance Co. stock on margin at a price of $28. Your broker requires you to deposit $10,000 a. Suppose you sell the stock at a price of $34. What is your return? What would your return have been had you purchased the stock without margin? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Rate of Return With margin Without margin b. What is your return if the stock price is $26 when you sell the stock? What would your return have been had you purchased the stock without margin? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Rate of Return With margin Without margin
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Home nert Page Layout Formulas Data Review View dd-Ins Cut Σ AutoSum ー E ゴWrap Text ta copy ▼ в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 C Paste Conditional Format CeInsert Delete Format Formatting, as Table w styles. ▼ ㆆ ▼ Sort &Find & 2 ClearFe Select Edting Format Painter Clipboard DG94 DE Font Alignment Number Cells DF DG DH DI DJ DK DL DM DN DO DP DQ DR DS WITH MARGIN 78 79 80 81 82 83 84 85 86 87 PURCHASE VALUE OF SHARES = OWN FUNDS BORROWED FUNDS = 16800 10000 6800 600 X 28 = INITIAL INVESTMENT = 6800 AFTER A YEAR, PRICE RISES TO 34 VALUE OF INVESTMENT = 600 X 34 = PAYMENT TO A BROKER = MY POSITION AFTER PAYMENT TO A BROKER OWN INVESTMENT = FINAL PROFIT- 20400 6800 13600 10000 3600 89 90 91 92 93 94 95 /4 RATE OF RETURN ON INVESTMENT 3600/10000- 36.00% , EV PE EPS DIV ABNORMAL APV ROSS , deberk | MARGIN MONEY al tax . PB ROPİ te EVA MVALEVERAGED BUYSWAPdistressBRIGHAN CAP GAIN 福 130% 11:00 25-01-2019Home nert Page Layout Formulas Data Review View dd-Ins s Cut E AutoSum Calibri ー E ゴWrap Text General copy ▼ ,_a. ars-函Merge & Center, $, % , 弼,8 C Paste B l u. Conditional Format CeInsert Delete Format Formatting, as Table w styles. ▼ ㆆ ▼ Sort &Find & 2 ClearFe Select Edting Format Painter Clipboard DF111 DE Font Alignment Number Styles Cells DF DG DH DI DJ DK DL DM DN DO DP DQ DR DS 94 95 96 97 98 WITHOUT MARGIN INVESTMENT VALUE OF INVESTMENT-600 X 34 = PROFIT = RATE OF RETURN ON INVESTMENT-3600/16800 = 600 x 28 = 16800 20400 3600 21.43% 100 101 102 103 104 105 106 107 108 109 110 36% WITH MARGIN WITHOUT MARGIN 21.43% 112 4 EV PE EPS DIV ABNORMAL APV ROSS deberk MARGIN MONEY al tax . PB ROPİ eEVA MVA LEVERAGED BUY SWAP distress BRIGHAN CAP GAIN 福 130% 11:05

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