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
If Mark does not borrow any money from his brokerage firm, what is the estimated return on the stock?
A) 30.00 percent B) –42.86 percent C) –30.00 percent D) 42.86 percent E) none of these
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