Posted: June 11th, 2016

At the end of the year, if John sold the Hannoush Jewelers stock for $40 per share, what would John s rate of return be for the year?

John Warren purchased 500 shares of Hannoush Jewelers stocks on margin at the beginning of the year for $30 per share. The initial margin requirement was 55%. John paid 13% interest on the margin loan and never faced a margin call. Hannoush Jewelers paid dividends of $1 per share during the year.

1. At the end of the year, if John sold the Hannoush Jewelers stock for $40 per share, what would John s rate of return be for the year?

2. At the end of the year, if John sold the Hannoush Jewelers stock for $20 per share, what would John s rate of return be for the year?

3. Recalculate your answers for (1) and (2) assuming the John made the Hannoush Jewelers stock purchase for cash instead of on margi