Question

Purchased $10,000 in stock, invested $5000 of own money, borrowed remaining $5000 at 8% interest. Stock increases by 10%, what is the rate of the investor's return? I calculated 12%, is that correct?

Answer 1

yes

Answer 2

the value of the stock increased by $1,000 so sold for $11,000.
The investor paid $10,000 + .08*5000 = $10,400
So the investor made $600 on the out of pocket investment of $5,000
(600/5000)*100 = 12 %