What will be your rate of return if the price

Assignment Help Accounting Basics

Reference no: EM132985764

Question: (1) Suppose that stock A currently is selling at $50 per share.

You buy 100 shares using $3,000 of your own money, borrowing the remainder of the investment from your broker, the maintenance margin ratio is 30%.

The rate on the margin loan is 10% per year, and the commission cost is 0.5% of the transaction value. What will be your rate of return if the price of A stock goes up by 10% during the next one year ? Assume that A pays $2 per share dividends during this period.

Reference no: EM132985764

Questions Cloud

What would normally give in duties as a public accountant : What would normally give in duties as a public accountant. Polo Babywear Ltd was formed on 30 August 2013 and its first financial year ended on 30 June 2015.

How did the key principles of due care develop : How did the key principles of 'due care' develop through the Kingston Cotton Mill Co. case, the London and General Bank case and the Pacific Acceptance case?

Prepare and extract of both p & l account : Prepare and extract of both P & L account and Balance sheet as at 31 Dec 2020

Determine the effective annual rate : Determine effective annual rate, or EAR (annual percentage yield) is? You are considering an investment that has a nominal annual interest rate of 6.30 percent.

What will be your rate of return if the price : What will be your rate of return if the price of A stock goes up by 10% during the next one year ? Assume that A pays $2 per share dividends during this period

How much money in account at the end of that time period : Account earning 6.96 percent per year, compounded semi-annually for the next 12 years. How much money will be in the account at the end of that time period?

Compute how much money have accumulated for retirement : Compute How much money have you accumulated for your retirement? You have accumulated some money for your retirement.

Comment on the trend of each of the four ratios : Modern companies are required to focus on long-term sustainable profits driving the need to actively manage environmental and social issues

Calculate the amounts of each payment for seth : Calculate the amounts of each payment. The second payment is to be twice the size of the first payment and the third payment is to be three-quarters the size.

User Account

All Pages