A brokerage firm conducts the following trades in a stock on trade date T: Buys 500 shares at $10 Buys 1,000 shares at $11 Sells 3,000 shares at $10.50 Sells 2,000 shares at $10.25 What does the brokerage firm do on T+1 ? Make two deliveries and receive two deliveries of stock at DTC in exchange for cash Make a single delivery of 3,500 shares and receive $36,000 at DTC Receive a single delivery of 3,500 shares and deliver $36,000 at DTC Neither make a delivery nor receive shares at DTC You observe the following: U.S. equities have a current dividend yield of 1.9%. The yield on the 10-year US Treasury is 1.53%. The difference in yield between nominal long-dated U.S. Treasury bonds and TIPS of the same maturity is 1.5%. The Congressional Budget Office (CBO) projects the long-term growth rate of real GDP at 1.8%. Yardeni Research estimates that stock buybacks have recently been 3.2% of market capitalization for the S\&P 500 . However, buybacks tend to drop more in recessions than dividends, so you believe that 2.5% is a more reasonable forecast going forward. The P/E Ratio on the S\&P500 is 16, and you expect long-term mean reversion to reduce the return on the S\&P500 by 1% per year. Under the Grinold-Kroner model, your estimate of the longterm return on the S\&P500 is closest to: 3.7% 6.7% 7.7% 4.3%