Assume That a Stock Is Priced at $50 and Pays

question 20

Multiple Choice

Assume that a stock is priced at $50 and pays an annual dividend of $2 per share. An investor purchases the stock on margin, paying $25 per share and borrowing the remainder from the brokerage firm at 9 percent annual interest. If, after one year, the stock is sold at a price of $65.25 per share, the return on the stock is

• A)60 percent.
• B)44 percent.
• C)30 percent.
• D)69 percent.

---

Definitions:

Ulysses Grant

An American military leader and the 18th President of the United States, who led the Union Army to victory during the Civil War and worked during his presidency to integrate the reconstructed states into the nation.

Europe Tour

A journey or series of visits to multiple countries in Europe, often for leisure, education, or cultural exploration.

Hero of Freedom

An individual recognized for their significant contributions, often through personal sacrifice or activism, toward the advancement of liberty and freedom for a group or society as a whole.

Union Army

The land force that fought for the Union during the American Civil War, comprised mainly of troops from the Northern states.