Problem:
Assume that ABC stock is priced at $115 per share and pays a dividend of $2.83 per share. An investor purchases the stock on margin, paying $72 per share and borrowing the remainder from the brokerage firm at 10 percent annualized interest. If after one year, the stock is sold at a price of $129 per share, what is the return to the investor?
Additional Information:
This question is from Finance and it is about calculation of return on stock. In this example, an investor purchases stock with personal and borrowed money. If the stock pays a good return after one year, calculate the return on the stock.