Suppose You Buy a Round Lot of Altman Industries Stock

question 20

Multiple Choice

Suppose you buy a round lot of Altman Industries stock on 50% margin when it is selling at $35 a share.The broker charges a 10 percent annual interest rate and commissions are 5 percent of the total stock value on both the purchase and the sale.If at year end you receive a $1.00 per share dividend and sell the stock for $42.63,what is your rate of return on the investment?

• A) 15.58%
• B) 11.84%
• C) 14.74%
• D) 21.84%
• E) 28.38%

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