The Price of Microsoft Is $40 Per Share and That

question 89

Multiple Choice

The price of Microsoft is $40 per share and that of Apple is $45 per share.The price of Microsoft increases to $45 per share after one year and to $50 after two years.Also,shares of Apple increase to $50 after one year and to $60 after two years.If your portfolio comprises 100 shares of each security,what is your portfolio return in year 1 and year 2? Assume no dividends are paid.

• A)11.21%,14.53%
• B)9.91%,17.96%
• C)11.76%,15.79%
• D)10.05%,18.76%

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Definitions:

Minimum Financial Tests

Financial benchmarks or ratios a company must achieve or maintain to comply with certain agreements, often related to debt covenants.

Borrower Must

Obligations or conditions a borrower needs to fulfill as per the terms of the loan agreement.

Debt Covenants

Specific agreements entered into by a borrower and lender, included in the terms of a loan or bond issuance, which place restrictions on the borrower to protect the lender.

Repayment Capacity

An assessment of a borrower's ability to repay a loan based on their financial situation.