Exhibit 12-1
Mark would like to purchase a stock priced at $70.The stock is not expected to pay any dividends in the coming year.He can either put up the entire amount and purchase the stock, or borrow $35 from his brokerage firm at an annual interest rate of 12 percent and put up the remainder.Mark thinks he can sell the stock for $100 after one year.
-Refer to Exhibit 12-1.If Mark borrows from his brokerage firm, his estimated return on the stock would be ____ percent.
A)42.86
B)85.71
C)73.71
D)30.00

Question

Quizplus · Accepted Answer

The Answer of Exhibit 12-1
Mark would like to purchase a stock priced at $70.The stock is not expected to pay any dividends in the coming year.He can either put up the entire amount and purchase the stock, or borrow $35 from his brokerage firm at an annual interest rate of 12 percent and put up the remainder.Mark thinks he can sell the stock for $100 after one year.
-Refer to Exhibit 12-1.If Mark borrows from his brokerage firm, his estimated return on the stock would be ____ percent.
A)42.86
B)85.71
C)73.71
D)30.00

Exhibit 12-1 Mark Would Like to Purchase a Stock Priced at $70.The