1. Assume that you would like to buy 100 shares of a stock that is currently priced at $ 70. The initial margin is 75% and maintenance margin is 35%.
If the stock pays $ 2 per share in annual dividend; the cost of borrowing is 3% per year; transaction costs are $ 80 calculate total dollar return and return on investment. Show your results step by step. Assume that you had bought the stock at $70 per share and it is now at $ 80 and you own 100 shares. Show your results below and in step by step.
Capital gain =
Dividend =
Interest cost=
Total dollar return =
Total % return on investment =
2. Calculate capital gain in dollar value and in percentage when you buy at $20 and sell at $30.
Dollar gain=
Percentage gain=