Q.An investor buys $16,000 worth of a stock priced at $20 per share using 60% initial margin. The broker charges 8% on the margin loan and requires a 35% maintenance margin. The stock pays a $1-per-share dividend in 1 year, and then the stock is sold at $23 per share. What was the investor's rate of return? Which one is correct: A.21.63% B.25.28% C.23.83% D.28%

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
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Q.An investor buys $16,000 worth of a stock priced at $20 per share using 60% initial margin. The broker charges 8% on the margin loan and requires a 35% maintenance margin. The stock pays a $1-per-share dividend in 1 year, and then the stock is sold at $23 per share. What was the investor's rate of return?

Which one is correct:

A.21.63%

B.25.28%

C.23.83%

D.28%

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