Q: 8
Section C (4 Mark)
An investor purchased on margin Alpha Computer for Rs. 30/- a share. The stock's price subsequently
rose to Rs. 50/- a share at which time the investor sold the stock. If the margin requirement is 60
percent and the interest rate on borrowed funds was 7 percent, what would be the percentage
earned on the investor's funds (excluding commissions)? What would have been the return if the
investor had not bought the stock on margin?
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