Question

A year ago, Kim Altman purchased 200 shares of BLK, Inc. for $25.50 on margin. At that time the margin requirement was 40 percent. If the interest rate on borrowed funds was 9 percent and she sold the stock for $34, what is the percentage return on the funds she invested in the stock

Answer 1

Answer:

69.83%

Explanation:

Calculation for Kim Altman percentage return on the funds she invested in the stock

Calculation for Kim’s own money =

$5100 x .4 = $2040

Caluculation for total Long Position =

$34 x 200 = $6800

Calculation for Interest Borrowed =

$3060 x .09 = $275.4

Total gain/profit =

$6800 - $5100 - $275.4

= $1424.60

Percentage on Return

= $1424.60 / $2040 = .6983

.6893x 100 = 69.83%

Therefore the percentage return will be 69.83%