Rudolfo purchased 900 shares of stock for $62.20 a share and sold them ten months later for $64.60 a share. The initial margin requirement on this stock is 75 percent and the maintenance margin is 40 percent. Ignoring dividends and costs, what is his holding period return?

Question

Business

Kiana Spence

9 July, 17:28

Rudolfo purchased 900 shares of stock for $62.20 a share and sold them ten months later for $64.60 a share. The initial margin requirement on this stock is 75 percent and the maintenance margin is 40 percent. Ignoring dividends and costs, what is his holding period return?

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Edward Buchanan · Answer 1

Holding period return is 5.14%

Explanation:

Return received during the holding period of timeof an investment is holding period return. It includes the Income received and Price variance of initial and current.

Holding Period Return = (Selling Price - Purchase price) / (Purchase price x Initial Margin)

Holding Period Return = ($64.60 - $62.20) / ($62.20 x 0.75)

Holding Period Retur = 0.0514

Holding Period Retur = 5.14 %