Stock Essay

Custom Student Mr. Teacher ENG 1001-04 5 March 2016

Stock

A stock sells for $10 per share. You purchase 100 shares for $10 a share (i.e., for $1000), and after a year the price rises to $17.50. What will be the percentage return on your investment if you bought the stock on margin and the margin requirement was (a) 25 percent, (b) 50 percent, and (c) 75 percent? (Ignore commissions, dividends, and interest expense.)

Initial Stock price per share$10
# of Shares Purchased 100
New Stock price per share $17.50

Gain= New Price – Initial Price
$750.00 = ($17.50 x 100) – ($10 x 100)

Purchase Price =Initial Stock price per share x # of Shares Purchased
$1,000

FORMULA:
Percentage Return =Gain
(Margin Requirement x Purchase Price)

SOLUTION to (a):
300%$750.00
$250.00

SOLUTION to (b):
150%$750.00
$500.00

SOLUTION to (c):
100%$750.00
$750.00

Free Stock Essay Sample

B

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  • University/College: University of Arkansas System

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 5 March 2016

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