Determine the investors expected return

Reference no: EM133491970

Question: An investor buys 400 shares of stock selling at $30 per share using a margin of 50%. The stock pays annual dividends of $1 per share. A margin loan can be obtained at an annual interest cost of 10%. The maintenance margin is 30%. Determine the investor's expected return if there is a 40% chance the stock price rises to $35 and a 60% chance the stock price decreases to $24 over the next 12 months.

Reference no: EM133491970

Questions Cloud

Determine the companys variable cost per unit : Determine the company's variable cost per unit and break-even quantity under the initial plan and Determine the company's variable cost per unit and break-even

Create a company-wide newsletter informing : You are now required to create a company-wide newsletter informing all employees of the new deal they are to offer to customers.

Discuss national organisation of nurse practitioner faculty : Discuss National Organisation of Nurse Practitioner Faculties competencies for Family. Discuss role of professional organisations in advanced nursing practice.

Determine the quoted price and settlement price : Determine the quoted price, settlement price and accrued interest of the bond - You can reinvest your coupons at a semi-annual rate of 1%. If interest rates

Determine the investors expected return : Determine the investors expected return if there is a 40% chance the stock price rises to $35 and a 60% chance the stock price decreases to $24 over the next

How have seen technology used to solve a business problem : Please share at least one example of how you have seen technology used to solve a business problem.

Arbitrage profits from this trading strategy : Which stock would the trader buy, and which would they sell, based on their trading strategy - Discuss three factors that could limit the arbitrage profits

What is the value of your inventory at the end of the day : How much do you earn on the 4,000 shares that you bought and sold? What is the value of your inventory at the end of the day

What specifically has home depot done to protect interests : How is this situation different than Smoot Hawley during the Great Depression? What specifically has Home Depot done to protect their interests?

User Account

All Pages