Allan Purchased 500 Shares of Stock on Margin for $31

question 80

Multiple Choice

Allan purchased 500 shares of stock on margin for $31.75 a share and sold the shares five months later for $34.50 a share. The initial margin requirement was 65% and the maintenance margin was 30%. The interest rate on the margin loan was 8.5%. He received no dividend income. What was his holding period return?

• A)7.05%
• B)8.45%
• C)9.88%
• D)10.76%
• E)11.46%

---

Definitions:

Modern Society

A society characterized by advanced industry, technology, and a high level of cultural, economic, and political complexity.

Violent TV

Pertains to television content that includes scenes of physical or psychological harm or aggressive behavior.

Moderate Levels

An intermediate degree or intensity of a given phenomenon, neither too high nor too low but within a middle range.

Nonviolent People

Individuals who prefer peaceful and non-aggressive means to resolve conflicts and achieve their objectives.