Tony Purchased 100 Shares of T-Rex Stock for $43 a Share.On

question 62

Multiple Choice

Tony purchased 100 shares of T-Rex stock for $43 a share.On the same day,Sam also purchased 100 shares of T-Rex stock for $43 a share.Tony paid cash for his purchase while Sam used margin.The initial margin requirement on this stock is 60 percent while the maintenance margin is 40 percent.Both Tony and Sam sold their shares after eight months at a price of $40 a share.The stock pays no dividends.Tony had a holding period percentage return of ________ percent as compared to Sam's ________ percent return.Ignore margin interest and trading costs.

• A) -4.19; -6.98
• B) -4.19; -11.63
• C) -6.98; -4.19
• D) -6.98; -11.63
• E) -11.63; -7.56

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Definitions:

Overhead Cost

Indirect expenses related to the general operation of a company, including administrative and facility costs not directly tied to production.

Activity-Based Costing

A costing method that assigns costs to products based on the activities required to produce them, improving accuracy by identifying cost drivers.

Machine-Hours

A measure of production time, expressed in hours, that machinery is operating.

Equipment Depreciation

The process of allocating the cost of tangible assets over their useful lives, reflecting the decrease in value of equipment over time.