Five Months Ago,you Purchased 400 Shares of Stock on Margin

question 47

Multiple Choice

Five months ago,you purchased 400 shares of stock on margin.The initial margin requirement on your account is 60 percent and the maintenance margin is 30 percent.The call money rate is 4.8 percent and you pay 1.85 percent above that rate.The purchase price was $16 a share.Today,you sold these shares for $18.00 each.What is your annualized rate of return?

• A)26.15 percent
• B)33.35 percent
• C)42.77 percent
• D)56.87 percent
• E)64.64 percent

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Definitions:

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered but not yet paid for, recorded as an asset on the balance sheet.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the amount of receivables that may not be collectible.

Sole Proprietorship

A business owned and operated by a single individual, with no legal distinction between the owner and the business entity.

Division of Partnership Income

The method or agreement by which profits are distributed among partners in a partnership.