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### 5 Cards in this Set

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 What is the most widely followed stock index? Dow Jones Industrial Average. Suppose you purchased 100 shares of stock in January for \$48 a share. You received dividends of \$1.25 per share on April 1 and July 1 and \$ .95 per share on September 1. You sold the stock in December for \$50 a share. What would be the stock's return on investment for the year? Assume a broker commission of 3% on the purchase and sale of the stock 5.08% --> (\$5,000 + \$125 + \$125 + \$95 - \$150) - (\$4,800 + \$144) = \$251; \$251/\$4,944 = .0508 You wish to sell short. You arrange to borrow from your broker 100 shares of stock in XYZ Corporation on January 2, 2001. You immediately sell 100 shares of XYZ at \$60 per share. On April 1, 2001, you instruct your broker to purchase 100 shares of XYZ at \$53 per share. You return 100 shares of XYZ stock to your broker. Assume the commission was \$200. (this amount represents commission on both the short sell and short cover -- one flat fee, total). What is your return on investment for this transaction? \$6,000 - \$5,300 = \$700 \$700 - \$200 = \$500 \$500/\$5,300 = .0943 = 9.4% OR 5.66% OR 5.46% If you own 100 shares of common stock, which you purchased for \$28 a share, and the company declares a cash dividend of \$.88 for the quarter, how much will you receive in dividends (for the quarter)? \$88 (\$100 × .88) What is a major advantage of stock splits (i.e. 2:1, 3:1,4:1, etc.)? Lowers the selling price of the stock, making the stock more affordable -- increase demand