Question

Rudolfo purchased 900 shares of stock for $62.20 a share and sold them ten months later for $64.60 a share. The initial margin requirement on this stock is 75 percent and the maintenance margin is 40 percent. Ignoring dividends and costs, what is his holding period return?

Answer 1

Answer:

Holding period return is 5.14%

Explanation:

Return received during the holding period of timeof an investment is holding period return. It includes the Income received and Price variance of initial and current.

Holding Period Return = ( Selling Price - Purchase price )/( Purchase price x  Initial Margin )

Holding Period Return = ($64.60 - $62.20)/($62.20 x 0.75)

Holding Period Retur = 0.0514

Holding Period Retur = 5.14 %