Investor A makes a cash purchase of 200 shares of AB&Ccommon stock for $60 a share. Investor B also buys 200 shares ofAB&C but uses margin. Each holds the stock for one year, duringwhich dividends of $6 a share are distributed. Commissions are 3percent of the value of a purchase or sale; the margin requirementis 60 percent, and the interest rate is 10 percent annually onborrowed funds.
A.
What is the percentage earned by investor A if he or she sellsthe stock after one year for $45? Round your answer to one decimalplaces.
%
What is the percentage earned by investor B if he or she sells thestock after one year for $45? Round your answer to one decimalplaces.
%
B.
What is the percentage earned by investor A if he or she sellsthe stock after one year for $60? Round your answer to one decimalplaces.
%
What is the percentage earned by investor B if he or she sells thestock after one year for $60? Round your answer to one decimalplaces.
%
C.
What is the percentage earned by investor A if he or she sellsthe stock after one year for $65? Round your answer to one decimalplaces.
%
What is the percentage earned by investor B if he or she sells thestock after one year for $65? Round your answer to one decimalplaces.
%
D.
What is the percentage earned by investor A if he or she sellsthe stock after one year for $75? Round your answer to one decimalplaces.
%
What is the percentage earned by investor B if he or she sells thestock after one year for $75? Round your answer to one decimalplaces.
%
Now the question changes
If the margin requirement had been 40 percent, what would havebeen the annual percentage returns?
A.
What is the percentage earned by investor A if he or she sellsthe stock after one year for $45? Round your answer to one decimalplaces.
%
What is the percentage earned by investor B if he or she sells thestock after one year for $45? Round your answer to one decimalplaces.
%
B.
What is the percentage earned by investor A if he or she sellsthe stock after one year for $60? Round your answer to one decimalplaces.
%
What is the percentage earned by investor B if he or she sells thestock after one year for $60? Round your answer to one decimalplaces.
%
C.
What is the percentage earned by investor A if he or she sellsthe stock after one year for $65? Round your answer to one decimalplaces.
%
What is the percentage earned by investor B if he or she sells thestock after one year for $65? Round your answer to one decimalplaces.
15% (I got this one right I am not sure how)
D.
What is the percentage earned by investor A if he or she sellsthe stock after one year for $75? Round your answer to one decimalplaces.
%
What is the percentage earned by investor B if he or she sells thestock after one year for $75? Round your answer to one decimalplaces.
%
Please show your work I want to learn this. Honestly if you justshow me how to do the first few of both sections (part 1 &2) itwould be greatly appreciated and help me learn this for my testlater in the semester. Thanks.
