Suppose You Buy a Round Lot of Altman Industries Stock

question 20

Multiple Choice

Suppose you buy a round lot of Altman Industries stock on 50% margin when it is selling at $35 a share.The broker charges a 10 percent annual interest rate and commissions are 5 percent of the total stock value on both the purchase and the sale.If at year end you receive a $1.00 per share dividend and sell the stock for $42.63,what is your rate of return on the investment?

• A) 15.58%
• B) 11.84%
• C) 14.74%
• D) 21.84%
• E) 28.38%

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Definitions:

Emulsification

The process of breaking up and evenly dispersing fat or oil in a liquid to form a stable mixture, such as in making mayonnaise or vinaigrettes.

Peristalsis

The series of wave-like muscle contractions that moves food through the digestive tract.

Hydrolysis

Hydrolysis is a chemical reaction in which water is used to break down the bonds of a compound, often splitting molecules into two or more smaller substances.

Alkaline Mucus

A type of mucus that has a higher pH and helps protect mucosal linings from acidic conditions.