True about intraperiod compounding

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Reference no: EM131958098

1. You purchased 250 shares of common stock on margin for $25 per share. The initial margin is 65%, and the stock pays no dividend. Your rate of return would be __________ if you sell the stock at $32 per share. Ignore interest on margin.

A. 35% B. 39% C. 43% D. 28%

2. Which of the following sentences is NOT true about (or related to) intraperiod compounding?

Intraperiod compounding is done by multiplying the interest rate i by k and dividing the n years by k, where k is the number of compounding periods per year.

Intraperiod compounding allows you to earn interest on interest earned and the principal more frequently than once a year.

Intraperiod compounding is common for deposits that pay interest monthly or quarterly.

All of the above.

None of the above.

Reference no: EM131958098

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