USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 22

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
You sell 100 shares short of AMF Corporation when it is selling at $45 per share. Your margin requirement is 60 percent and the commission on the sale is $50 and the broker charges 10 percent annual interest. AMF Corporation paid a $0.50 per share dividend while you were short the stock. After one year, you cover your short sale at $35 per share with a $50 commission for the purchase.
-Refer to Exhibit 3.8. What is your total dollar return on this investment?

• A) $1,000
• B) $900
• C) $850
• D) $670
• E) $520

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Definitions:

Internal Validity

The extent to which a study is able to produce evidence that its results are caused by the variables it is testing, free from external influence.

Correlational Method

A statistical technique used to determine the degree to which two variables are related without inferring a cause-and-effect relationship.

Confounding Variable

An extraneous variable in an experimental design that correlates with both the dependent and independent variables, potentially leading to a false assumption of causality.

Experimental Approach

A research method involving the manipulation of variables to observe and measure the effects on subjects in a controlled setting.