Six-month holding period on the trader initial equity

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Reference no: EM131530923

A trader has purchased 500 shares of a non-dividend-paying ?rm on margin at a price of $40 per share. The leverage ratio is 2.0. Six months later, the trader sells these shares at $$35.20 per share. Ignoring any interest paid on the amount borrowed and transaction costs, what was the six-month rate of return during the six-month holding period on the trader’s initial equity? Please explain.

Reference no: EM131530923

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