You purchase 500 shares of stock on margin at a cost per share of $22.The initial margin requirement is 60 percent.The effective interest rate on the margin loan is 6.4 percent.How much interest will you pay if you repay the loan in four months?
A) $68.77
B) $91.93
C) $102.16
D) $112.38
E) $117.04

Question

Quizplus · Accepted Answer

Margin interest = [(1 + 0.064)^{4 / 12} - 1] × [500 × $22 × (1 - 0.60)] = $91.93

You Purchase 500 Shares of Stock on Margin at a Cost