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You've just opened a margin account with $10,000 at your local brokerage firm. You instruct your broker to purchase 450 shares of Smolira Golf stock, which currently sells for $38 per share. Suppose the annual call money rate is 6 percent and your broker charges you an annual spread of 1.25 percent over this rate. You hold the stock for six months and sell at a price of $47 per share. The company paid a dividend of $0.25 per share the day before you sold your stock. What is your effective percentage annual rate of return?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92790516

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