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18 February, 14:44

A year ago, Kim Altman purchased 200 shares of BLK, Inc. for $25.50 on margin. At that time the margin requirement was 40 percent. If the interest rate on borrowed funds was 9 percent and she sold the stock for $34, what is the percentage return on the funds she invested in the stock

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  1. 18 February, 18:20
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    69.83%

    Explanation:

    Calculation for Kim Altman percentage return on the funds she invested in the stock

    Calculation for Kim's own money =

    $5100 x. 4 = $2040

    Caluculation for total Long Position =

    $34 x 200 = $6800

    Calculation for Interest Borrowed =

    $3060 x. 09 = $275.4

    Total gain/profit =

    $6800 - $5100 - $275.4

    = $1424.60

    Percentage on Return

    = $1424.60 / $2040 =.6983

    .6893x 100 = 69.83%

    Therefore the percentage return will be 69.83%
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