Suppose that TSLA’s current share price is $20. You buy 1,000 shares using $15,000 of your own money, borrowing the remainder of the purchase price from your broker. Assume that the annual rate on the margin loan is 10%. What is the rate of return if you sell your TSLA shares after 1 year at $22? Assume that TSL
Suppose that TSLA’s current share price is $20. You buy 1,000 shares using $15,000 of your own money, borrowing the remainder of the purchase price from your broker. Assume that the annual rate on the margin loan is 10%. What is the rate of return if you sell your TSLA shares after 1 year at $22? Assume that TSL
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 12P
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Suppose that TSLA’s current share price is $20. You buy 1,000 shares using $15,000 of your own money, borrowing the remainder of the purchase price from your broker.
Assume that the annual rate on the margin loan is 10%. What is the
rate of return if you sell your TSLA shares after 1 year at $22? Assume that TSLA pays no dividends.5%
10%
15%
20%
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