USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 16

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Shares of RossCorp stock are selling for $45 per share. Brokerage commissions are 2 percent for purchases and 2 percent for sales. The interest rate on margin debt is 6.25 percent per year. The maintenance margin is 30 percent.
-Refer to Exhibit 3.7. At the end of one year, shares of RossCorp stock are selling for $35 per share and the company paid dividends of $0.85 per share. Assuming that you paid the full cost of the purchase, what is your rate of return if you sell RossCorp stock?

• A) -33.05 percent
• B) -23.42 percent
• C) 23.42 percent
• D) 33.05 percent
• E) -25.35 percent

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Definitions:

Intravenous

Pertaining to within a vein, often used in the context of delivering medication or fluids directly into the bloodstream.

Blood Transfusion

The process of transferring blood or blood products from one person into the circulatory system of another.

Antihistamine

A type of medication used to relieve symptoms of allergies, such as sneezing, itching, and runny nose, by blocking histamine action in the body.

Itchy

A sensation that causes the desire or reflex to scratch.