Calculate mark percentage return on investment

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Two of your acquaintances (Mark and John) approach you seeking investment advice. Each of them had $100 000 of savings to invest. Both invested in ABC Ltd shares which were trading at $20 per share. Mark used his entire savings to purchase ABC Ltd shares. John felt that ABC Ltd shares would perform well so he approached a broker and took up a margin transaction with a 55% initial requirement. The broker charged John 10% annual interest, and commissions of 3% of the total stock value on both the purchase and sale. The dividend at the end of year was $0.50 per share and the shares trade at $27 at the end of the year.

Required:

Question A. How many shares did Mark buy?

Question B. How many shares did John buy?

Question C. Calculate Mark's percentage return on investment.

Question D. Calculate John's percentage return on investment.

Question E. Who made a better investment decision?

Reference no: EM132659467

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