Assume That You Purchase Shares of a Company That Recently

question 7

Multiple Choice

Assume that you purchase shares of a company that recently executed an IPO at the post-offering market price of $50 per share,and you hold the shares for one year.You then sell your shares for $52.50 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) 2.50%
• B) 4.81%
• C) 5.00%
• D) 7.50%

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Definitions:

Smashed

To break something into pieces suddenly, noisily, and violently; shattered.

Broken Glass

Fragmented pieces of glass often resulting from breakage, which can pose a safety hazard.

Source Amnesia

The inability to remember where, when or how previously learned information has been acquired, while retaining the factual knowledge.

False Recollection

The misremembering or distortion of a memory, often with high confidence in the inaccurate details.