USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 41

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
You decide to sell 100 shares of Davis Industries short when it is selling at its yearly high of $35. Your broker tells you that your margin requirement is 55 percent and that the commission on the sale is $15. While you are short, Davis pays a $0.75 per share dividend. At the end of one year you buy your Davis shares (cover your short sale) at $30 and are charged a commission of $15 and a 6 percent interest rate.
-Refer to Exhibit 3.4. What is your dollar return on the investment?

• A) $130.50
• B) $300.50
• C) $100.00
• D) $1,773.75
• E) $3,500.00

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Definitions:

Motivation

An inner drive that directs a person’s behavior toward goals.

Perception

The process by which a person selects, organizes, and interprets information received from his or her senses.

Security Needs

The need to protect oneself from physical and economic harm.