Suppose You Buy a Round Lot of HS Inc

Multiple Choice

Suppose you buy a round lot of HS Inc. stock on 55 percent margin when it is selling at $40 a share. The broker charges a 10 percent annual interest rate and commissions are 4 percent 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 percent
B) -21.84 percent
C) 14.74 percent
D) 21.84 percent
E) 35.17 percent