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An investor buys $16,000 worth of a stock priced at $20 per share using 60% initial margin. The broker charges 8% on the margin loan and requires a 35% maintenance margin. The stock pays a $.50-per-share dividend in 1 year, and then the stock is sold at $23 per share. What was the investor's rate of return?

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GameKnight31

Answer:

The rate of return for the investor = (11,888 - 9,600) / 9,600 = 23.83%

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