An Investor Puts Up $5,000 but Borrows an Equal Amount

question 17

Multiple Choice

An investor puts up $5,000 but borrows an equal amount of money from their broker to double the amount invested to $10,000.The broker charges 7% on the loan.The stock was originally purchased at $25 per share and in one year the investor sells the stock for $28.The investor's rate of return was ____.

• A) 17%
• B) 12%
• C) 14%
• D) 19%

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Definitions:

Assimilation

The process by which individuals or groups adopt the culture and norms of another group, losing their original identity partially or completely.

Accommodation

A cognitive process described by Piaget where individuals adjust their schemas or understanding in response to new information.

Schema

A cognitive framework or concept that helps organize and interpret information in the world around us.

Preexisting Idea

An opinion, belief, or concept that one holds before being exposed to new information or experiences.