Suppose You Buy a Round Lot of Altman Industries Stock

Multiple Choice

Suppose you buy a round lot of Altman Industries stock on 50 percent margin when it is selling at $35 a share. The broker charges a 10 percent annual interest rate and commissions are 5 percent of the total stock value on both the purchase and the sale. If at year end you receive a $1.00 per share dividend and sell the stock for $42.63, what is your rate of return on the investment?

A) 15.58 percent
B) 11.84 percent
C) 14.74 percent
D) 21.84 percent
E) 28.38 percent