Tao would like to purchase a stock priced at $80. 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 $45 from her brokerage firm at an annual interest rate of 10 percent and put up the remainder. She thinks she can sell the stock for $100 after one year. If she borrows from her brokerage firm, her estimated return on the stock would be percent. A) 42.86

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Tao would like to purchase a stock priced at $80. 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 S45 from her brokerage firm at an
annual interest rate of 10 percent and put up the remainder. She thinks she can sell the stock for $100 after one
year. If she borrows from her brokerage firm, her estimated return on the stock would be
percent.
O A) 42.86
QB) 44.29
C) 57.33
D) 70.00
Transcribed Image Text:Tao would like to purchase a stock priced at $80. 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 S45 from her brokerage firm at an annual interest rate of 10 percent and put up the remainder. She thinks she can sell the stock for $100 after one year. If she borrows from her brokerage firm, her estimated return on the stock would be percent. O A) 42.86 QB) 44.29 C) 57.33 D) 70.00
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