Classified as long-term capital gain

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Reference no: EM131937904

On August 1, Sonya buys 100 shares of PDQ company stock on margin for a total cost of $100 per share. The margin requirement established by her broker is 65%, and Sonya's broker charges 7% interest on the margin loan. She received an annual cash dividend of $2.45 per share. If Sonya sells the stock exactly one year later for $120 per share, ignoring commissions, which of the following is true?

Sonya's profit on the transaction will be classified as a long-term capital gain

Sonya must remit the annual cash dividend that she receives to her broker to meet the margin requirement

Due to the margin loan interest, Sonya's percentage profit on the transaction would have been greater if she had furnished the entire cost of the purchase herself.

Sonya's profit on the margin transaction is in excess of 30%.

Reference no: EM131937904

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