Suppose You Buy a Round Lot of Altman Industries Stock

question 15

Multiple Choice

Suppose you buy a round lot of Altman Industries stock on 50 percent margin when it is selling at $35 a share. The broker charges a 10 percent annual interest rate and commissions are 5 percent of the total stock value on both the purchase and the sale. If at year end you receive a $1.00 per share dividend and sell the stock for $42.63, what is your rate of return on the investment?

• A) 15.58 percent
• B) 11.84 percent
• C) 14.74 percent
• D) 21.84 percent
• E) 28.38 percent

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Definitions:

Imposes a Tariff

The action by a government to establish a tax on imported or, occasionally, exported goods.

Korean Imports

Goods and services bought by residents of a country from Korea, which could include electronics, vehicles, and other products.

U.S. Market

The economic environment for buying and selling goods and services within the United States, encompassing all activities of production, promotion, and distribution.

Import Quota

A government-imposed limit on the quantity of a particular commodity that can be imported into a country over a specified period of time, used to protect domestic industries.