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margin account

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Question

ou’ve just opened a margin account with $16,000 at your local brokerage firm. You instruct your broker to

purchase 700 shares of Landon Golf stock, which currently sells for $47 per share. Suppose the call money rate is 6 percent and your broker charges you a spread of 1 percent over this rate. You hold the stock for 5 months and sell at a price of $54 per share. The company paid a dividend of $.26 per share the day before you sold your stock.

1.What is your total dollar return from this investment? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the “$” sign in your response.)
  Dollar return$   
2.What is your effective annual rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.)
  Effective annual return %  

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