Monday, April 8, 2019

Stock Essay Example for Free

Stock EssayA stock sells for $10 per share. You bribe century shares for $10 a share (i.e., for $1000), 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.)Initial Stock price per share$10 of Shares Purchased 100New Stock price per share $17.50Gain= New Price Initial Price$750.00 = ($17.50 x 100) ($10 x 100)Purchase Price =Initial Stock price per share x of Shares Purchased$1,000 prescriptPercentage Return =Gain(Margin Requirement x Purchase Price)SOLUTION to (a)300%$750.00$250.00SOLUTION to (b)cl%$750.00$500.00SOLUTION to (c)100%$750.00$750.00

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