A 1038 b 1284 c 1095 d 2184 e 2838 a 15 suppose you

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a) -10.38% b) -12.84% c) -10.95% d) 21.84%
e) 28.38% (a) 15 Suppose you buy a round lot of HS Inc. stock on 55% margin when it is selling at $40 a share. The broker charges a 10 percent annual interest rate and commissions are 4 percent of the total stock value on both the purchase and the sale. If at year end you receive a $0.90 per share dividend and sell the stock for 35 5/8, what is your rate of return on the investment? a) -35.17% b) -21.84% c) 14.74% d) 21.84% e) 35.17% (a) 16 Suppose you buy a round lot of Altman Industries stock on 50% margin when it is selling at $35 a share. The broker charges a 10 percent annual interest rate and commissions are 5 percent of the total stock value on both the purchase and the sale. If at year end you receive a $1.00 per share dividend and sell the stock for $42.63, what is your rate of return on the investment? a) 15.58% b) 11.84% c) 14.74% d) 21.84% e) 28.38% USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS You decide to sell short 200 shares of XCorp stock at a price of $75. Your margin deposit is 65 percent. Commission on the sale is 1.25%. While you are short, the stock pays a $1.75 per share dividend. Interest on margin debt is 5.25% per year. (c) 17 At the end of one year you close out your short position by purchasing share of XCorp at $45 per share. The commission is 1.25%. What is your rate of return on the investment?
a) -55.92% b) 10.31% c) 51.06% d) 23.1% e) -33.05% (a) 18 Suppose at the end of one year XCorp is selling at $90 per share and you cover your short position at this price. What is your rate of return on the investment? (Assume a 1.25% commission on the purchase) a) -40.64% b) -25.53% c) 5.21% d) 72.7% e) –71.2% USE THE FOLLOWING INFORMATION FOR THE NEXT FIVE PROBLEMS Shares of RossCorp stock are selling for $45 per share. Brokerage commissions are 2% for purchases and 2% for sales. The interest rate on margin debt is 6.25% per year. The maintenance margin is 30%. (e) 19 At the end of one year shares of RossCorp stock are selling for $55 per share and the company paid dividends of $0.85 per share. Assuming that you paid the full cost of the purchase, what is your rate of return if you sell RossCorp stock? a) 18.08% b) 23.51% c) 22.32% d) 14.96% e) 19.28% (b) 20 At the end of one year shares of RossCorp stock are selling for $35 per share and the company paid dividends of $0.85 per share. Assuming that you paid the full cost of the purchase, what is your rate of return if you sell RossCorp stock? a) -33.05% b) -23.42% c) 23.42% d) 33.05%
e) –25.35% (c) 21 At the end of one year shares of RossCorp stock are selling for $55 per share and the company paid dividends of $0.85 per share. Assuming that you borrowed 25% of cost of the purchase, what is your rate of return? a) -23.51% b) 29.35% c) 23.51% d) 5.21% e) 10.06% (b) 22 At the end of one year shares of RossCorp stock are selling for $35 per share and the company paid dividends of $0.85 per share. Assuming that you borrowed 25% of cost of the purchase, what is your rate of return? a) 33.05% b) -33.05% c) -23.51% d) -25.35% e) –40.64% (d) 23 Assume that you purchase 150 shares of RossCorp stock at $45 each by making a margin deposit of 55%. At what price would you receive a margin call?

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