You paid cash for $1,300 worth of stock a year ago. Today the portfolio is worth $1,888.
a. What rate of return did you earn on the investment?
b. Now suppose that you bought the same stock but bought it on margin. The initial margin requirement was 75%. Recalculate your rate of return, ignoring any interest due.
c. Recalculate the rates of return for a cash purchase in the event that the stock is worth $925 today.
d. Recalculate the rates of return for a margin purchase in the event that the stock is worth $925 today