Sara opens a brokerage account and purchases 400 shares of Tesla at $20 per share She borrows $3,000 from her broker to help pay for the purchase. The interest rate on the loan is 8% per year. If the share price moves to $18 a year from now, what is her investment return? a) -5.2% b) -20.8% c) -10%

Sara opens a brokerage account and purchases 400 shares of Tesla at $20 per share She borrows $3,000 from her broker to help pay for the purchase. The interest rate on the loan is 8% per year. If the share price moves to $18 a year from now, what is her investment return? a) -5.2% b) -20.8% c) -10%

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

Problem 1PS

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Question

Sara opens a brokerage account and purchases 400 shares of Tesla at $20 per share.
She borrows $3,000 from her broker to help pay for the purchase. The interest rate
on the loan is 8% per year. If the share price moves to $18 a year from now, what is
her investment return?
a) -5.2%
b) -20.8%
c) -10%
d) 20.8%

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