chapter3longmargin_i

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Buying on Margin Ending Return on Ending Return with St Price Investment St Price No Margin Initial Equity Investment 10,000.00 -42.00% -19.00% Amount Borrowed 10,000.00 20 -122.00% 20 -59.00% Initial Stock Price 50.00 25 -102.00% 25 -49.00% Shares Purchased 400 30 -82.00% 30 -39.00% Ending Stock Price 40.00 35 -62.00% 35 -29.00% Cash Dividends During Hold Per. 0.50 40 -42.00% 40 -19.00% Initial Margin Percentage 50.00% 45 -22.00% 45 -9.00% Maintenance Margin Percentage 30.00% 50 -2.00% 50 1.00% 55 18.00% 55 11.00% Rate on Margin Loan 8.00% 60 38.00% 60 21.00% Holding Period in Months 6 65 58.00% 65 31.00% 70 78.00% 70 41.00% Return on Investment 75 98.00% 75 51.00% Capital Gain on Stock -4000.00 80 118.00% 80 61.00% Dividends 200.00 Interest on Margin Loan 400.00 Net Income -4200.00 Initial Investment 10000.00 Return on Investment -42.00% Margin Call: Margin Based on Ending Price 37.50% Price When Margin Call Occurs $35.71 Return on Stock without Margin -19.00% A B C D E F G H 1 2 3 4 5 6 7 8
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