If a Stock Is Purchased for $12

question 97

Multiple Choice

If a stock is purchased for $12.50 per share and held one year, during which time a $1.50 dividend is paid and the price drops to $10.75, the percentage return is:

• A)-2%.
• B)-1%.
• C)1%.
• D)2%.

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Definitions:

Escalating Commitment

The phenomenon where people increase their investment or involvement in a decision or action despite facing negative feedback or outcomes.

Confirmation Error

A cognitive bias that involves focusing on information or evidence that confirms pre-existing beliefs or hypotheses, while ignoring contradictory data.

Strategic Opportunism

The practice of seizing strategic opportunities in a timely and efficient manner, often with flexibility and readiness to adapt.

Three-component Model

A framework in psychology, specifically in attitude analysis, which consists of cognitive, affective, and behavioral components.