1. You purchase 100 shares for $50 a share ($5,000), and after a yearthe price rises to $60. What will be the percentage return on yourinvestment if you bought the stock on margin and the marginrequirement was? a.25 percent  b.50 percent  c.75 percent  2. Repeat Problem 1 to determine the percentage return on yourinvestment but in this case suppose the price of the stock falls to$40 per share. What generalization can be inferred from youranswers to Problems 1 and 2? 3. How many years will it take for 197000 dollars to grow to 554000 dollars if it is invested in an account with a quoted annual interest rate of 8 percent with monthly compounding interest?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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1. You purchase 100 shares for $50 a share ($5,000), and after a year
the price rises to $60. What will be the percentage return on your
investment if you bought the stock on margin and the margin
requirement was?

a.25 percent 

b.50 percent 

c.75 percent 

2. Repeat Problem 1 to determine the percentage return on your
investment but in this case suppose the price of the stock falls to
$40 per share. What generalization can be inferred from your
answers to Problems 1 and 2?

3. How many years will it take for 197000 dollars to grow to 554000 dollars if it is invested in an account with a quoted annual interest rate of 8 percent with monthly compounding interest?

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