Exhibit 4.6 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 90

Multiple Choice

Exhibit 4.6
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
You decide to sell short 200 shares of XCorp stock at a price of $75. Your margin deposit is 65 percent. Commission on the sale is 1.25%. While you are short, the stock pays a $1.75 per share dividend. Interest on margin debt is 5.25% per year.
-Refer to Exhibit 4.6. At the end of one year you close out your short position by purchasing share of XCorp at $45 per share. The commission is 1.25%. What is your rate of return on the investment?

• A)-55.92%
• B)10.31%
• C)51.06%
• D)23.1%
• E)-33.05%

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Definitions:

Departmental Contribution

The amount of income earned by a specific department after direct costs associated with the department have been subtracted.

Overhead

The ongoing administrative, general, and maintenance expenses incurred during the production process, not including direct labor or materials costs.

Profit Centers

Parts of an organization that are responsible for generating revenue and evaluated based on their profitability.

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated as net profit divided by the cost of the investment.