Calculating Return on Investment
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Question
BBZ stock is priced at $80 per share and pays a dividend of $1.60 per share. An investor purchases the stock on margin, paying $50 per share and borrowing the remainder from the brokerage firm at 8 percent annualized interest. If after one year, the stock is sold at a price of $90 per share, what is the return to the investors?
Summary
The question belongs to Finance and it deals with calculation of return on stock. This example is about a investor who buys stock with personal and borrowed money. Assuming that the stock gives a good return and after one year the stock is sold for profit, the return on the stock needs to be calculated.
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