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

Understand the impact of changes in consumer preferences on the demand curve.

Recognize the role of substitutes and complements in market dynamics.

Assess the effects of technological advancements and cost changes on market supply.

Evaluate the impact of changes in input prices on the supply curve.

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Definitions:

Average Fixed Cost Curve

A graphical representation depicting how the average fixed costs of production change with different output levels.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the number of units produced, indicating the cost per unit of output.

Line Segment AB

A part of a line that is bounded by two distinct end points, specifically points A and B, and contains every point on the line between A and B.

Techniques of Production

The methods and processes used in the making of goods or services, involving the combination of labor, materials, machinery, and technology.