You Purchased 100 Shares of a Stock for $22 a Share

question 57

Multiple Choice

You purchased 100 shares of a stock for $22 a share and sold them 7 months later for $26 a share. The initial margin was 70% and the maintenance margin was 35%. You received no dividend income. Your holding period return was _____ while it would have been ____ if not used margin for the purchase. Ignore interest and trading costs.

• A) 10.29%; 6.99%
• B) 18.18%; 25.97%
• C) 25.97%; 18.18%
• D) 11.90%; 17.87%
• E) 10.45%; 11.90%

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Definitions:

No Clutch Brake

Refers to a transmission design that does not incorporate a clutch pedal for the brake mechanism, often found in automatic or semi-automatic vehicles.

Pressure Plate Spring

Part of a vehicle’s clutch system, providing the necessary force to engage or disengage the clutch plate and the flywheel.

Clutch Pack Assembly

A component of automatic and some manual transmissions consisting of multiple alternating friction and steel plates, enabling different gear ratios.

Wood Chocks

Wooden blocks used to prevent wheels or heavy equipment from moving or rolling.