Question

Suppose the call money rate is 6.8 percent, and you pay a spread of 1.9 percent over that. You buy 1,500 shares at $50 per share with an initial margin of 25 percent. One year later, the stock is selling for $58 per share, and you close out your position. What is your return assuming no dividends are paid? (Round your answer to 2 decimal places. )

Answer 1

Solution Given that Call worey grate = 6.89. spread additionally : 194 Total interest = (68+1.9) 8.7% Given shavies 1500.. Brice per share = $50. Intial margin = est, To fed cost Price - Given shares & Price per share 1500 x 50 Margin paid . = 75000. Total cost price) & (Marija faid). = 75000 a $66 Interest paid $18,750 = Margin paid #1631.25 Total interest

Cliven selling price = $58. / share. Totd selling price & Shares & selling price (Chare 500x58 = $87000 Total selling price - Total return Cest frice ( = 87000 - 75,000 (ca-vacht - 13,co.) Actul retun - keturn - Einterest Paid = 18000 - 1621.95 Actual return $10,368.75 return : Actual rotun Margin paid - 10368.75 x 100 1870 - beturn 55.3%)