What is the percentage return of your investment

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Reference no: EM131625175

1. You buy 100 shares of Starbucks at $55. At the end of the year it is selling for $65. What is the percentage return of your investment?

2. In problem one you make the same investment. However, you do not have $5,500 to invest so you open a margin account. You are able to put up 60% per share and borrow the rest from the broker. The broker charges you brokers call (2%) plus 1. What is your return at the end of the year?

3. Redo 1 and 2 assuming that Starbucks paid a $1.50 dividend.

4. Redo 1 and 2 assuming that during the year it was announced that Starbucks is losing market share to competitors and the stock has tumbled to $45. (do not include the dividend in question 3 in this problem)

5. If the broker requires a maintenance margin of 35%, at what price will you get a margin call?

6. You sell Visa short at $70 per share. At the end of the year you close out your position when V is selling for $60 per share. You are required to put up 60% of the original stock price plus the amount you sell V for ($70). What is your percentage return? How does your return change if V pays a $2.60 dividend?

Reference no: EM131625175

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