Mark Uses His Own Funds to Purchase a Stock Priced

question 34

Multiple Choice

Mark uses his own funds to purchase a stock priced at $70. He thinks he can sell the stock for $100 after one year. What is Mark's estimated return on the stock?

• A)30.00 percent
• B)- 42.86 percent
• C)- 30.00 percent
• D)42.86 percent
• E)None of these are correct.

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Definitions:

Fair Value

An estimate of the price at which an asset or liability could be exchanged between willing parties in an arm's length transaction.

Share Capital

Fund raised by a company through the issuance of shares to investors, representing the equity stake of shareholders in the company.

Retained Earnings

Profits generated by a company that are not distributed to shareholders as dividends but are kept as reinvestment in the company or to pay off debt.

Fair Value

What one would receive for selling an asset or pay to transfer a liability in a structured deal among those active in the market at the point of measurement.