1) An investor purchases 500 shares of ABC stock on margin at a price of $35 per share. Assume an initial margin requirement of 45% and annual interest on margin loans of 12%. Over the next year ABC...

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1) An investor purchases 500 shares of ABC stock on margin at a price of $35 per share. Assume an initial margin requirement of 45% and annual interest on margin loans of 12%. Over the next year ABC stock rises to $40. What is the return on the investment?2) Explain the difference between the role o...

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Answer To: 1) An investor purchases 500 shares of ABC stock on margin at a price of $35 per share. Assume an...

Robert answered on Dec 20 2021

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1) An investor purchases 500 shares of ABC stock on margin at a price of $35 per share. Assume an initial margin requirement of 45% and annual interest on margin loans of 12%. Over the next year ABC stock rises to $40. What is the return on the investment?
Solution:
Investment = $500 ($35)...

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1) An investor purchases 500 shares of ABC stock on margin at a price of $35 per share. Assume an initial margin requirement of 45% and annual interest on margin loans of 12%. Over the next year ABC...

Answer To: 1) An investor purchases 500 shares of ABC stock on margin at a price of $35 per share. Assume an...

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