Suppose You Have $10,000 in Cash to Invest

Multiple Choice

Suppose you have $10,000 in cash to invest.You decide to sell short $5,000 worth of Kinston stock and invest the proceeds from your short sale,plus your $10,000 into one-year U.S.treasury bills earning 5%.At the end of the year,you decide to liquidate your portfolio.Kinston Industries has the following realized returns:

The return on your portfolio is closest to:

A) -0.5%
B) 13.5%
C) -2.5%
D) 14.5%