Exhibit 4.5 Use the Information Below for the Following Problem(S)

question 69

Multiple Choice

Exhibit 4.5
Use the Information Below for the Following Problem(S)
You decide to sell 100 shares of Topgun Enterprises Inc. short when it is selling at its yearly high of $42.25. Your broker tells you that your margin requirement is 60 percent and that the commission on the sale is $20. While you are short, Topgun pays a $0.85 per share dividend. At the end of one year you buy your Topgun shares (cover your short sale) at $44 and are charged a commission of $20 and a 5 percent interest rate.
-Refer to Exhibit 4.5.What is your rate of return on the investment?

• A) 10.48%
• B) 12.87%
• C) -13.98%
• D) -24.49%
• E) -15.05%

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Definitions:

Unemployment Rate

The percentage of the labor force that is jobless and actively looking for employment, a key economic indicator.

Estimated

Calculated approximations or predicted values based on statistical models and available data.

Teenagers

Individuals who are in the age group of 13 to 19 years.

Labor-Force Participation

The proportion of individuals within the working-age range who are currently employed or are seeking employment actively.