Question

Lisa Lasher buys 400 shares of stock on margin at $21 per share. If the margin requirement is 50 percent, how much must the stock rise for her to realize a 35-percent return on her invested funds

Answer 1

Answer:

$3.68 per share

Explanation:

Lisa Lasher purchases 400 shares of stock on margin at the price of $21 per share

The margin requirement is 50%

= 50/100

= 0.5

The first step is to calculate the amount of money invested

= $21×400×0.5

= $4,200

The amount in which the stock must rise to inorder for Lisa to realize a 35% return on invested funds can be calculated as follows

= 35/100×4,200

= 0.35×4,200

= $1,470

$1470/400 shares

= $3.68 per share

Hence the stock must rise to $3.68 per share for Lisa to realize a 35% return on her invested funds