ZuoTi.Pro
Question

Lisa Lasher buys 400 shares of stock on margin at $30 per share. If the margin...

Lisa Lasher buys 400 shares of stock on margin at $30 per share. If the margin requirement is 40 percent, how much must the stock rise for her to realize a 15-percent return on her invested funds? (Ignore dividends, commissions, and interest on borrowed funds.) Round your answer to the nearest cent.

$  

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Margin requirement = 40%

Initial Investment = number of shares * price per share * margin requirement

Initial Investment = [$30 * 400 * 0.40] = $4,800

To realize a 15-percent return the value of position in stock must rise by ($4800*15%) = $720

The dollar must increase by ($720 / 400 share) = $1.80

Answer: Total Increase = $720

Per share increase = $1.80

0 0
Add a comment
Know the answer?
Add Answer to:
Lisa Lasher buys 400 shares of stock on margin at $30 per share. If the margin...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Lisa Lasher buys 410 shares of stock on margin at $20 per share. If the margin...

    Lisa Lasher buys 410 shares of stock on margin at $20 per share. If the margin requirement is 40 percent, how much must the stock rise for her to realize a 40-percent return on her invested funds? (Ignore dividends, commissions, and interest on borrowed funds.) Round your answer to the nearest cent.

  • Barbara buys 100 shares of DEM at $35 a share and 200 shares of GOP at...

    Barbara buys 100 shares of DEM at $35 a share and 200 shares of GOP at $40 a share. She buys on margin and the broker charges interest of 10 percent on the loan. (MUST BE DONE ON EXCEL) (a) If the margin requirement is 55 percent, what is the maximum amount she can borrow? (b) If she buys the stocks using the maximum amount of borrowed money and holds the securities for a year, how much interest must she...

  • Barbara buys 130 shares of DEM at $33.00 a share and 190 shares of GOP at...

    Barbara buys 130 shares of DEM at $33.00 a share and 190 shares of GOP at $37.00 a share. She buys on margin and the broker charges interest of 7 percent on the loan. If the margin requirement is 42 percent, what is the maximum amount she can borrow? Round your answer to the nearest cent. $   If she buys the stocks using the borrowed money and holds the securities for a year, how much interest must she pay? Round...

  • An investor buys 200 shares of stock selling at ​$89 per share using a margin of...

    An investor buys 200 shares of stock selling at ​$89 per share using a margin of 59%. The stock pays annual dividends of $ 2.00 per share. A margin loan can be obtained at an annual interest cost of 9.6​%. Determine what return on invested capital the investor will realize if the price of the stock increases to ​$111 within six months. What is the annualized rate of return on this​ transaction? If the price of the stock increases to...

  • An investor buys 100 shares of stock selling at $76 per share using a margin of...

    An investor buys 100 shares of stock selling at $76 per share using a margin of 67%. The stock pays annual dividends of $3.00 per share. A margin loan can be obtained at an annual interest cost of 8.6%. Determine what return on invested capital the investor will realize if the price of the stock increases to $110 within six months. What is the annualized rate of return on this transaction? If the price of the stock increases to $110...

  • An investor buys 200 shares of stock selling at $66 per share using a margin of...

    An investor buys 200 shares of stock selling at $66 per share using a margin of 74%. The stock pays annual dividends of $3.00 per share. A margin loan can be obtained at an annual interest cost of 8.9%. Determine what return on invested capital the investor will realize if the price of the stock increases to $108 within six months. What is the annualized rate of return on this transaction? If the price of the stock increases to $108...

  • 1. A stock sells for $10 per share. You purchase 100 shares for $10 a share...

    1. A stock sells for $10 per share. You purchase 100 shares for $10 a share (i.e., for $1,000), and after a year the price rises to $17.50. What will be the percentage return on your investment if you bought the stock on margin and the margin requirement was (a) 25 percent, (b) 50 percent, and (c) 75 percent? (Ignore commissions, dividends, and interest expense.) Please show how to solve in Excel Step-by-Step.

  • Assume that an investor buys 100 shares of stock at $35 per share, putting up a...

    Assume that an investor buys 100 shares of stock at $35 per share, putting up a 73% margin. a. What is the debit balance in this transaction? b. How much equity funds must the investor provide to make this margin transaction? c. If the stock rises to $54 per share, what is the investor's new margin position? a. The debit balance in this transaction is s (Round to the nearest dollar.) b. The amount of equity funds the investor must...

  • An investor purchased on margin Orange Computer for $30 a share. The stock's price subsequently increased...

    An investor purchased on margin Orange Computer for $30 a share. The stock's price subsequently increased to $50 a share at which time the investor sold the stock. If the margin requirement is 60 percent and the interest rate on borrowed funds was 7 percent, what would be the percentage earned on the investor's funds (excluding commissions)? What would have been the return if the investor had not bought the stock on margin?

  • can be obtained at an An investor buys 300 shares o stock seling a $76 per...

    can be obtained at an An investor buys 300 shares o stock seling a $76 per share using a margin 0155%. The stock pays annual dividends o $3.00 per share. A margin loan months, What is the annualized rate of return on this transaction? annual interest cost o 8.5%. Determine what return on Invested capital the investor wil realize i he price o he stock increases to $11 within s If the price of the stock increases to $111 within...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT