An investor puts up $16,000 but borrows an equal amount of money from his broker to double the amount invested to $32,000. The broker charges 8% on theloan. The stock was originally purchased at $40 per share, and in 1 year the investor sells the stock for $45. The investor's rate of return wasMultiple ChoiceOO16.50%8.50%17.00%4.50%

RATE OF RETURNRate of Return is the Ratio between Net Income & Investment.Return on Investment…

Answered: An investor puts up $16,000 but borrows…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

am. 105.
You purchase 2,000 shares of Nice Kick Group (NKG) at $45 per share by giving your broker $60,000 to establish your margin account and borrowing the rest from your broker. A year has passed (t=1), and NKG paid out a dividend of $2 per share. The maintenance margin is 25%. If you paid an interest at a rate of 8% on the funds you borrowed from your broker, what is the NKG price at which would trigger a margin call? A. $60.94 B. $36.25 C. $71.07 D. $18.93
- Assume that six months ago you bought 2,500 shares of a stock at $70 per share using a margin. The margin rate was 40% and the interest rate on the margin loan was 8%. Assume no commissions. What is your gain or loss if the current stock price is $71 per share? A. -$1,700 B. $2,500 C. $6,700
Suppose Tyler initially pays $76,000 toward the purchase of $108,000 worth of stock, borrowing the remaining balance from one of notorious brokers, Diego. In this case, Tyler’s initial percentage margin is closest to A. 70.37%. B. 60.50%. C. 39.50%. D. 29.63%. Clear my choice
Jedson Pinto is a trader for Articuno Capital. He decided to buy 100 shares of Tesla at $ 150 per share. Two-thirds of the purchase was paid with cash, with the remainder using borrowed money. One month later, the stock price increased to $165 per share. The annual interest rate is 2%. What is Pinto's levered return? Group of answer choices 19.67% 14.83% 10.00% 29.63%
25. Assume you purchased 2000 shares of XYZ common stock on margin at $30 per share from your broker. If the initial margin is 70%, what is the interest payment on the amount you borrowed from the broker if interest rate is 9%? $18000 $1620 $42000 $3780
Dee Trader opens a brokerage account and purchases 200 shares of Internet Dreams at $50 per share. She borrows $3,300 from her broker to help pay for the purchase. The interest rate on the loan is 6%. Required: a What is the margin in Dee's account when she first purchases the stock? b. If the share price falls to $40 per share by the end of the year, what is the remaining margin in her account?
Seven months ago, you purchased 400 shares of stock on margin. The initial margin requirement on your account is 70 percent and the maintenance margin is 30 percent. The call money rate on the margin loan is 6.65 percent. The purchase price was $16 a share. Today, you sold these shares for $18.00 each. What is your annualized rate of return? O 64.64 percent O 56.87 percent O 33.35 percent O 42.77 percent O 29.39 percent O O
Finance You short sold 700 shares of a stock at $25 a share. The initial margin requirement is 75 percent and the maintenance margin is 35 percent. The price of the stock has changed to $30 a share today. How much money do you owe your broker today? Provide the answer in dollars, accurate to two decimal places.

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