Lisa Would Like to Purchase a Stock Priced at $70

question 12

Multiple Choice

Lisa would like to purchase a stock priced at $70. The stock is not expected to pay any dividends in the coming year. She can either put up the entire amount and purchase the stock, or borrow $35 from her brokerage firm at an annual interest rate of 12 percent and put up the remainder. She thinks she can sell the stock for $100 after one year. If she borrows from her brokerage firm, her estimated return on the stock would be ____ percent.

• A)42.86
• B)85.71
• C)73.71
• D)30.00

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