USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 2

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 rate of return on the investment?

• A) 10.48 percent
• B) 12.87 percent
• C) 13.98 percent
• D) 15.49 percent
• E) 18.87 percent

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Definitions:

Middle Manager

A managerial position that involves overseeing junior managers while being responsible to senior managers, typically involving the management of operational-level activities.

Introversion

A personality trait signified by a focus on internal feelings rather than external sources of stimulation.

Agreeableness

A characteristic showcasing friendliness, benevolence, and a willingness to work together.

Trait Terms

Words or phrases used to describe consistent patterns in behavior, thought, and emotion in an individual.