Purchase Solution

Return to the investors

Not what you're looking for?

Ask Custom Question

Assume that Vogl stock is priced at $50 per share and pays a dividend of $1 per share. An investor's purchases the stock on margin, paying $30 per hare and borrowing the remainder from the brokerage firm at 10% annualized interest. If, after one year, the stock is sold at a price of $60 per share, what is the return to the investors?

Purchase this Solution
Solution Summary

The solution explains how to determine the rate of return to the investors

Solution Preview

The amount borrowed is $20 and the amount invested $30. At the end of ...

Purchase this Solution
Free BrainMass Quizzes
Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

View More Free Quizzes
Related BrainMass Solutions

  • Risk-Return concepts

    The small investors have to choose the best risk- return opportunity from the efficient set, according to his attitude towards risk-return, so that it will be easy for the investors to conceive the probable rates of return from an investment.

  • Required rate of return

    23706 Required rate of return . What are the three factors that influence the required rate of return by investors?

  • Choosing a project's discount rate

    The investments generate a return of 10% while the investors are asking for a return of 12%. Effectively the company is borrowing at 12% and investing at 10%. Thus it would not be able to repay the investors.

  • Capital Asset Pricing Model-assumptions & reality

    However, there are investors who prefer only high risk securities. 5. It assumes that all information about the asset and return is available to all the investors in the market.

  • Risk Return

    The risk level for institutional investors is relatively higher than for smaller investors. However, it is not only advantageous for institutional investors to buy shares, but smaller investors too can make money in the stock market.

  • Why Investors Demand Higher Expected Rates of Return

    Retrieved from http://pages.stern.nyu.edu/~adamodar/pptfiles/acf2E/risk&ret.ppt The solution gives 334 words and 2 references to answer this corporate finance question on why investors require a higher rate of return.

  • What kind of return on equity could explain investors' willingness to pay a price equal to 50 times earnings on this stock?

    The expert determines what kind of return on equity could explain investors' willingness to pay a price equal to 50 times earnings on this stock.

  • Analysis CAPM model, Beta and Expected Return on Shares

    Higher risk means higher required rate of return for investors. Investors will want to pay less for these shares.

  • Comparing risky assets

    Those investors that consider investing in risky assets usually limit themselves to those assets that offer the maximum expected return for a given level of risk or offer the minimum amount of risk for a given level of expected return.

  • Foundation of Financial Management

    Required rate of return is the loss or gain that investors are going to receive on their investment over certain period of time.

View More Related Solutions