79. An investor buys a stock on margin. Assume that the interest on the loan and the dividend are
both paid at the end of the holding period. The data related to the transaction are as follows:
Number of shares 500
Purchase price per share $28
Leverage ratio 3.33
Commission $0.05 / share
Position holding period 6 months
Sale price per share $30
Call money rate 5% per year
Dividend $0.40 / share
The investor’s total return on this investment over the margin holding period is closest to:
A. 15.6%.
B. 16.7%.
C. 21.4%.
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