You purchase 275 shares of 2nd Chance Co. stock on margin at a price of $53. You

Question

You purchase 275 shares of 2nd Chance Co. stock on margin at a price of $53. Your broker requires you to deposit $8,000.

Suppose you sell the stock at a price of $62. What is your return? What would your return have been had you purchased the stock without margin? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

What is your return if the stock price is $46 when you sell the stock? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

You purchase 275 shares of 2nd Chance Co. stock on margin at a price of $53. Your broker requires you to deposit $8,000.

Explanation / Answer

SOLUTION:

1.

Terminal Price = $62

Without Margin = ($62 - $53) / $53 = 16.98%

With Margin = {($62

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