John Doe buys 125 shares of Microgen Inc. at $35 a share and holds the stock for a year. Patricia Smith buys 200 shares of Microgen Inc. for $32 on margin. The margin requirement is 65% and the interest rate on the borrowed funds is 8%. If they both sell the stock for $47 after a year, what percentage return does each investor earn?

John Doe buys 125 shares of Microgen Inc. at $35 a share and holds the stock for a year. Patricia Smith buys 200 shares of Microgen Inc. for $32 on margin. The margin requirement is 65% and the interest rate on the borrowed funds is 8%. If they both sell the stock for $47 after a year, what percentage return does each investor earn?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 2P

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