Mark Would Like to Purchase a Stock Priced at $70

question 16

Multiple Choice

Mark would like to purchase a stock priced at $70. Mark thinks he can sell the stock for $100 after one year. If Mark does not borrow any money from his brokerage firm, what is the estimatedreturn on the stock?

• A) 30.00 percent
• B) -42.86 percent
• C) -30.00 percent
• D) 42.86 percent
• E) none of the above

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Definitions:

Contingent Liability

A potential financial obligation that depends on a future event arising from past transactions or events.

Probable

In financial and legal contexts, a high likelihood that an event will occur, often used in reference to the realization of assets or the incurrence of liabilities.

Reasonably Estimated

A valuation or measurement that can be calculated with a reasonable level of accuracy, often applied in accounting for provisions and contingencies.

Fair Value Option

The choice given to companies to report financial assets and liabilities at estimates of their current market value, rather than at historical cost or using other valuation methods.