Allan Purchased 600 Shares of Stock on Margin for $41

question 59

Multiple Choice

Allan purchased 600 shares of stock on margin for $41 a share and sold the shares five months later for $42.50 a share. The initial margin requirement was 65 percent and the maintenance margin was 30 percent. The interest rate on the margin loan was 10 percent. He received no dividend income. What was his holding period return?

• A) 1.05 percent
• B) 3.45 percent
• C) 4.88 percent
• D) 7.50 percent
• E) 7.82 percent

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