What will be your rate of return after one year

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Reference no: EM132015039

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) 39%

B) 43%

C) 35%

D) 28%

2. You sell short 300 shares of Microsoft that are currently selling at $30 per share. You post the 50% margin required on the short sale. If you earn no interest on the funds in your margin account, what will be your rate of return after 1 year if Microsoft is selling at $27? (Ignore any dividends.)

A) 15%

B) 20%

C) 10%

D) 6.67%

Reference no: EM132015039

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