An Investor Puts Up $5 000 but Borrows an Equal

question 20

Multiple Choice

An investor puts up $5 000 but borrows an equal amount of money from their broker to double the amount invested to $10 000. The broker charges 7% on the loan. The shares were originally purchased at $25 per share and in one year the investor sells the shares for $28. The investor's rate of return was ________.

• A)17%
• B)12%
• C)14%
• D)19%

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Definitions:

Organic Vanilla

Refers to vanilla products that are produced following organic farming practices without the use of synthetic pesticides, artificial fertilizers, or genetically modified organisms (GMOs).

Pints

A unit of volume used primarily in the United States and the British imperial system, equal to 16 fluid ounces or approximately 473 milliliters.

Cent

a unit of currency that represents 1/100th of the basic unit of currency in many countries, including the United States and the Eurozone.

Chocolate Syrup

A sweet, chocolate-flavored liquid or sauce often used as a topping for desserts and in beverages.