Exhibit 4.7 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 85

Multiple Choice

Exhibit 4.7
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Shares of RossCorp stock are selling for $45 per share. Brokerage commissions are 2% for purchases and 2% for sales. The interest rate on margin debt is 6.25% per year. The maintenance margin is 30%.
-Refer to Exhibit 4.7. At the end of one year shares of RossCorp stock are selling for $35 per share and the company paid dividends of $0.85 per share. Assuming that you borrowed 25% of cost of the purchase, what is your rate of return?

• A)33.05%
• B)-33.05%
• C)-23.51%
• D)-25.35%
• E)-40.64%

---

Definitions:

Annual Withdrawals

The amount of money that an individual withdraws from an investment or savings account each year.

Interest

The charge for borrowing money or the return earned on an investment, typically expressed as a percentage.

Years

A measurement of time consisting of 12 months or 365 days, used in financial calculations to determine periods.

Equipment

Tangible property used in business operations, such as machinery, computers, and furniture, which usually has a long-term use.