1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
viva [34]
3 years ago
9

Suppose you buy 100 shares of stock initially selling for $50, borrowing 25% of the necessary funds from your broker; that is, t

he initial margin on your purchase is 25%. You pay an interest rate of 8% on margin loans. a. How much of your own money do you invest? How much do you borrow from your broker? b. What will be your rate of return for the following stock prices at the end of a one-year holding period? (i) $40, (ii) $50, (iii) $60.
Business
1 answer:
lana [24]3 years ago
7 0

Answer:

money invest is $3750

amount of loan owned to broker = $1350

when selling price is $40 rate of return = - 29.33%

when selling price is $50  rate of return = - 2.67%

when selling price is $60  rate of return = 24%

Explanation:

given data

No of share = 100

initial selling = $50

borrow = 25%

initial margin purchase = 25%

interest rate = 8%

to find out

How much money invest and How much borrow from broker and rate of return at end of 1 year at (i) $40, (ii) $50, (iii) $60

solution

we know total investment is here

total investment = No of share × initial selling per share

total investment = 100 × 50

total investment = $5000

so

borrow fund is = 0.25 × 5000 = $1250

and Equity invest = total investment - borrow fund

equity invest = 5000 - 1250 = $3750

and

amount of loan own to broker at the end of year is

amount of loan = borrow fund × ( 1 + rate )

amount of loan = 1250 ( 1 + 0.08)

amount of loan owned to broker = $1350

and

selling price here after 1 year is $40

so rate of return is = \frac{(no of share * selling price) -loan amount - equity invested}{equity invested}     ........................1

rate of return is = \frac{(100 * 40) - 1350 - 3750}{3750}

rate of return = - 29.33%

and

selling price here after 1 year is $50

put here value

rate of return is = \frac{(100 * 50) - 1350 - 3750}{3750}

rate of return = - 2.67%

and

selling price here after 1 year is $60 so from equation 1

put the value

rate of return is = \frac{(100 * 60) - 1350 - 3750}{3750}

rate of return = 24%

You might be interested in
A __________ represents a long-term partnership between two or more companies established to help each firm build competitive ma
Sveta_85 [38]

A<u> strategic alliance</u> represents a long-term partnership between two or more companies established to help each firm build competitive market advantages.

long-term partnership agreements regularly incorporate provisions that require consent from the opposite companions earlier than a brand new accomplice is added -- in large part to make certain that the unique harmony and electricity stays intact.

Long-time period relationships have a tendency to remain everywhere from to a few years, with couples breaking apart round this time.

A long-term partnership purchaser dating way which you paint on constructing a dating together along with your clients to create high-stage loyalty to your company. That's the exception that your commercial enterprise can get on the street to success.

Learn more about the long-term partnerships here: brainly.com/question/15913927

#SPJ4

6 0
1 year ago
julia suffered a severe stroke and has been admitted to a private hospital where she is expected to remain for the rest of her l
Musya8 [376]

Answer:

0

Explanation:

Because she is a chronically ill individual, Julia may exclude the full amount she receives as it is less than the amount of actual expenses and the daily limitation of $300 established by law.

That's why the taxable amount is 0.

6 0
3 years ago
Twilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The balance of each account receivab
AnnZ [28]

Answer:

a.                          Acct. receivable   % uncollectible   Est. uncollectible

1-30 days old           $63,000                      3%                    $1,890

31-90 days old         $12,000                      14%                   $1,680

> 90 days old           $5,000                       37%                  <u>$1,850</u>

                                                                   Total                   <u>$5,420</u>

b. Date   General journal                                         Debit    Credit

Dec 31    Bad debts expenses                                $5,150

                      Allowance for doubtful accounts                   $5,150

              ($5,420 - $270)

6 0
3 years ago
PLEASE HELP ILL GIVE BRAINLIEST ANSWER
Rina8888 [55]
Warehousing & Distribution Center

Distribution management refers to the process of overseeing the movement of goods from supplier or manufacturer to point of sale. It is an overarching term that refers to numerous activities and processes such as packaging, inventory, warehousing, supply chain, and logistics.
4 0
3 years ago
Required information
ArbitrLikvidat [17]

Answer:

book value = $13,200 (purchase price) + $4,200 (paint) + $2,300 (accessories) = $19,700

useful life 5 years, salvage value $5,100

assuming the company uses straight line depreciation:

depreciation per year = ($19,700 - $5,100) / 5 years = $2,920 per year

the journal entries to record the purchase of the vehicle and the improvements are:

July 1, 2022, vehicle is purchased

Dr Suburban SUV 13,200

    Cr Cash 13,200

July 1, 2022, vehicle's paint and accessories

Dr Suburban SUV 6,500

    Cr Cash 6,500

the journal entry to record depreciation expense ($2,920 x 6 months)

December 31, 2022, depreciation expense

Dr Depreciation expense 1,460

    Cr Accumulated depreciation - Suburban SUV 1,460

the journal entry to record insurance expense ($2,100 x 6 months)

December 31, 2022, insurance expense

Dr Insurance expense 1,050

    Cr Prepaid insurance 1,050

5 0
3 years ago
Other questions:
  • Q 9.1: When can interest be included in the acquisition cost of a plant asset?A : during the construction period of a self-const
    13·2 answers
  • Net income for the year was $161,511. The beginning net position balances are net investment in capital assets, $585,400; restri
    11·1 answer
  • Ron shaich, ceo and founder of panera bread started the company with a mission—which is the first step in
    15·1 answer
  • Selvig and Anzer, a military weapons manufacturer, is divided into different organizational units—the S&amp;A Logistics, which h
    15·1 answer
  • Currently you are the only gas stations for40 miles. The average price of gasoline in your state is 3.50 per gallon. How much sh
    14·1 answer
  • Grade<br> Age<br> Favorite food........
    13·2 answers
  • Higher income taxes cause a ____________ shift of the labor supply curve, which then produces __________ Real GDP. a. leftward;
    15·1 answer
  • What are some actions that may be taken by a nation to reduce interest rates in a country?
    9·1 answer
  • Often Running is a retail store that caters to individuals who enjoy running and walking. However, the store understands that no
    9·1 answer
  • The goals of most labor unions in the 1930s was the right to organize, in the 1970s to increase worker pay and benefits, in the
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!