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Calculation of return on stock

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Reference no: EM13828177

Problem:

BBZ stock is priced at $80 per share and pays a dividend of $1.60 per share. An investor purchases the stock on margin, paying $50 per share and borrowing the remainder from the brokerage firm at 8 percent annualized interest. If after one year, the stock is sold at a price of $90 per share, what is the return to the investors?

Additional Information:

This question is from Finance as well as it deals with calculation of return on stock. This example is about the investor who purchases stock with personal as well as borrowed money. Supposing that the stock gives a good return and after one year the stock is sold for profit, the return on the stock needs to be computed.

Reference no: EM13828177

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