Suppose You Buy a Round Lot of DG Solutions Stock

question 32

Multiple Choice

Suppose you buy a round lot of DG Solutions stock on 60 percent margin when it is selling at $55 a share. The broker charges a 10 percent annual interest rate and commissions are 3 percent of the total stock value on both the purchase and the sale. If at year end you receive a $1.10 per share dividend and sell the stock for 55 5/8, what is your rate of return on the investment?

• A) -10.38 percent
• B) -12.84 percent
• C) -10.95 percent
• D) 21.84 percent
• E) 28.38 percent

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Definitions:

Milton Friedman

An American economist and Nobel laureate who is best known for his strong belief in free-market capitalism and the minimal role of government in the economy.

Adam Smith

A Scottish economist and philosopher, best known for his influential works on capitalism and the concept of the "invisible hand" guiding economic markets.

Archie Carroll

A scholar known for his work on corporate social responsibility (CSR), particularly for introducing the pyramid model of CSR.

Environmental Groups

Organizations focused on advocating for the protection and preservation of the environment and promoting sustainability.