Answer:
A.37%
B.No because the margin is above the requirement at 37%.
C.-118%
Explanation:
Old Economy Traders
a.
1,550 shares*$74 per share = 114,700
margin requirement is 52% so equity =59,644
1 year later price increase to 81
$1550 shares*$81 per share = 125,550
Dividend = $4*1550 = 6,200
Margin = 114,700/131750 = 37%
b.
No because the margin is above the requirement at 37%.
c.
Price of 1550 stock year 1 at 81$/share = 125,550
114,700 – 125,500 = -10800
Rate of return = (-10800 -59,644)/59,644= -118%
