What is the holding period return

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Question - You purchased 100 shares of IBM common stock on margin at $65 per share. Assume the initial margin is 50% and the maintenance margin is 25%.

(1) Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin.

(2) Assume the interest rate is 4%. What is the holding period return (HPR) and Annualized Return if price of the stock goes up to $80 in 6 months?

(3) Assume the interest rate is 4%. What is the holding period return (HPR) and Annualized Return if price of the stock goes down to $40 in 6 months?

Reference no: EM132820870

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