Exhibit 4-5 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 54

Multiple Choice

Exhibit 4-5
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
You decide to sell 100 shares of Topgun Enterprises Inc. short when it is selling at its yearly high of $42.25. Your broker tells you that your margin requirement is 60% and that the commission on the sale is $20. While you are short, Topgun pays a $0.85 per share dividend. At the end of one year you buy your Topgun shares (cover your short sale) at $44 and are charged a commission of $20 and a 5% interest rate.
-Suppose you buy a round lot of HS Inc. stock on 55% margin when it is selling at $40 per share. The broker charges a 10% annual interest rate and commissions are 4% of the total stock value on both the purchase and the sale. If at year end you receive a $0.90 per share dividend and sell the stock for 35 5/8, what is your rate of return on the investment?

• A) -35.17%
• B) -21.84%
• C) 14.74%
• D) 21.84%
• E) 35.17%

---

Definitions:

Test Market

A geographic region or demographic group used to gauge the viability of a product or service in a larger market by analyzing consumer response before a full-scale launch.

New-Product Development Process

The seven stages an organization goes through to identify opportunities and convert them into salable products or services.

New-Product Development Process

The sequence of steps involved in bringing a new product from concept to market, including research, design, and testing.

Idea Generation

Idea generation is the process of creating, suggesting, or conceptualizing new thoughts, concepts, or solutions, often in the context of problem-solving or innovation.