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?

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Business

Espinoza

13 October, 23:43

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?

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Rhett Russo · Answer 1

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 %