return on margin with commissions return, purchase, anything, commission, buying

simeezee

What am I missing here? Re: calculating return when buying on margin...

V5 p.29 shows count sale commission in numerator and purchase commission in denominator but EOC answer shows count both in numerator and purchase in denominator
like this...
(both (purchase and sale) commissions subtracted in numerator/purchase commission added to cost in denominator)

isn't this double counting?

can't find anything in errata...can anyone clarify this for me please?

dcfox83

No, that is right

Value of Portfolio at End - Value of Portfolio Beginning + Dividends or Other Cash Flow
-----------------------------------------------------------------------------------------------------
Value of Portfolio Beginning - Debit Balance


It's fairly simple, you're taking your gains and dividing it by what you actually put in, not the value of the starting portfolio

Value of Portfolio Beginning is actually what you put in + debit balance from margin.