Exhibit 4.7 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 65

Multiple Choice

Exhibit 4.7
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

Shares of RossCorp stock are selling for $45 per share. Brokerage commissions are 2% for purchases and 2% for sales. The interest rate on margin debt is 6.25% per year. The maintenance margin is 30%.
-Refer to Exhibit 4.7.At the end of one year shares of RossCorp stock are selling for $55 per share and the company paid dividends of $0.85 per share.Assuming that you borrowed 25% of cost of the purchase,what is your rate of return?

• A) -23.51%
• B) 29.35%
• C) 23.51%
• D) 5.21%
• E) 10.06%

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Definitions:

Simplify

The process of making an expression, equation, or fraction as straightforward as possible by reducing it to its basic form.

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To assess or determine the value, significance, or condition of something through careful analysis.

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A mathematical phrase that includes numbers, variables, and operation symbols but does not contain an equal sign.

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