Assume That You Purchase Shares of a Company That Recently

question 45

Multiple Choice

Assume that you purchase shares of a company that recently executed an IPO at the post-offering market price of $32 per share,and you hold the shares for one year.You then sell your shares for $36 per share.The company does not pay dividends,and you are not subject to capital gains taxation.What net return did you earn on your share investment?

• A) 11.11%
• B) 12.00%
• C) 12.50%
• D) 13.00%

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Definitions:

Scientific Methods

A systematic and logical approach to acquiring knowledge that involves observation, experimentation, and data analysis.

Causal Attribution

The process of assigning causes or reasons to behaviors and events, explaining why things happen or why certain actions were taken.

Covariation Model

A psychological theory proposing that people determine the cause of an event based on the pattern of covariation between the event and the potential causes across time and circumstances.

Discreteness

Pertains to the characteristic of being separate and distinct in nature, often referring to the classification of data or phenomena into distinct categories.