Suppose You Buy a Round Lot of DG Solutions Stock

question 56

Multiple Choice

Suppose you buy a round lot of DG Solutions stock on 60% margin when it is selling at $55 a share. The broker charges a 10 percent annual interest rate and commissions are 3 percent of the total stock value on both the purchase and the sale. If at year end you receive a $1.10 per share dividend and sell the stock for 55 5/8, what is your rate of return on the investment?

• A)-10.38%
• B)-12.84%
• C)-10.95%
• D)21.84%
• E)28.38%

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