Gary Buys a House for $200,000 Using $10,000 of His

question 13

Multiple Choice

Gary buys a house for $200,000 using $10,000 of his own money and gets a mortgage for the remaining $190,000.If the value of the house increases 7%,what will be the percentage increase in Gary's investment?

• A) 25%
• B) 7%
• C) 14%
• D) 70%
• E) 140%

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Definitions:

Total Stockholders' Equity

This represents the total amount of capital contributed by shareholders plus the retained earnings of a company, indicating the net worth of the company from a shareholder's perspective.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the market capitalization remains the same.

Paid-in Capital

The amount of money that a company has received from shareholders in exchange for shares of stock, beyond the par value of the shares.

Cost Method

An accounting method used to value certain investments at their original purchase cost, less any impairments.