You’ve just opened a margin account with $25,080 at your local brokerage firm. You instruct your broker to purchase 600 shares of Landon Golf stock, which currently sells for $76 per share. Suppose the call money rate is 6.5 percent and your broker charges you a spread of 1.5 percent over this rate. You hold the stock for five months and sell at a price of $81 per share. The company paid a dividend of $0.31 per share the day before you sold your stock.
a. What is your total dollar return from this investment? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b. What is your effective annual rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)