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Computing the return on the stock

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Reference no: EM13828181

Problem:

Assume that ABC stock is priced at $115 per share and pays a dividend of $2.83 per share. An investor purchases the stock on margin, paying $72 per share and borrowing the remainder from the brokerage firm at 10 percent annualized interest. If after one year, the stock is sold at a price of $129 per share, what is the return to the investor?    

Additional Information:

This question is from Finance and it is about calculation of return on stock. In this example, an investor purchases stock with personal and borrowed money. If the stock pays a good return after one year, calculate the return on the stock.

Reference no: EM13828181

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