You Have Just Bought (On Margin)100 Shares of IBM Corp

question 90

Essay

You have just bought (on margin)100 shares of IBM Corp.common stock for $108 per share.One year from now you expect to sell the stock for $140.The interest charge will be 9%.What return do you expect to earn on your investment? (Show all work.Ignore commissions.)

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Definitions:

Full Employment Level

An economic condition in which virtually all individuals willing and able to work at prevailing wage rates are employed.

Aggregate Demand

The sum of all demands for goods and services in an economy, measured at a particular price level over a defined time interval.

John Maynard Keynes

An economist from Britain whose concepts revolutionized the field of macroeconomics and also altered the economic policy-making of states.

Government Spending

refers to the total expenditure by a government on goods, services, and public projects, including salaries, infrastructure, and welfare programs.