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Calculating profits on margined and unmargined investments

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Problem - Calculating profits on margined and unmargined investments. Claire Gerber wants to buy 300 shares of Google, which is selling in the market for $537.34 a share. Rather than liquidate all her savings, she decides to borrow through her broker at 5 percent a year. Assume that the margin requirement on common stock is 50 percent. If the stock rises to $625 a share over the next year, calculate the dollar profit and percentage return that Claire would earn if she makes the investment with 50 percent margin. Contrast these figures to what she'd make if she uses no margin.

Reference no: EM132801594

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