B
baz1811
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I've got an exam coming up in a couple of weeks and have some sample questions, i've lost the notes I have relating to the below question so am a bit confused!
Question Sample:
Molly & Scott both have £200,000 to spend. Molly buys 50,000 shares in FANTOAGASTA at £4 each. She incurs commission costs of 1% and stamp duty of 0.5%, each calculated on the total cost.
Scott deposits £40,000 with his futures broker and buys 50,000 FANTOAGASTA shares at £4 each using an Equity Contract for Difference. The commission charge is 0.25%. Assume the interest cost to him is charged at LIBOR (4.5%) + 2.5%.
One week after they have done this, FANTOAGASTA pays a dividend of 7p per share (net of tax at 10%). Both Molly & Scott sell their shares after 2 months.
What is the % return on their investment, for each of them, if the share price on the date of sale is:
i) £5.00
ii) £3.20
Question Sample:
Molly & Scott both have £200,000 to spend. Molly buys 50,000 shares in FANTOAGASTA at £4 each. She incurs commission costs of 1% and stamp duty of 0.5%, each calculated on the total cost.
Scott deposits £40,000 with his futures broker and buys 50,000 FANTOAGASTA shares at £4 each using an Equity Contract for Difference. The commission charge is 0.25%. Assume the interest cost to him is charged at LIBOR (4.5%) + 2.5%.
One week after they have done this, FANTOAGASTA pays a dividend of 7p per share (net of tax at 10%). Both Molly & Scott sell their shares after 2 months.
What is the % return on their investment, for each of them, if the share price on the date of sale is:
i) £5.00
ii) £3.20