Suppose you purchase 750 shares of stock at $35 per share with an initial cash investment of $14,000. The call money rate is 5 percent and you are charged a 1.5 percent premium over this rate.
Calculate your return on investment one year later if the share price is $35. Suppose instead you had simply purchased $14,000 of stock with no margin. What would your rate of return have been now?
Calculate your return on investment one year later if the share price is $19. Suppose instead you had simply purchased $14,000 of stock with no margin. What would your rate of return have been now?