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Suppose you have $10,000 in cash to invest. You decide tosell short $5000 worth of Kinston stock and invest the proceedsfrom your short sale, plus

Suppose you have $10,000 in cash to invest. You decide tosell short $5000 worth of Kinston stock and invest the proceedsfrom your short sale, plus your $10,000 into one-year U.S. treasurybills earning 5%. At the end of the year, you decide toliquidate your portfolio. Kinston Industries has thefollowing realized returns:

P0

P1

Kinston

$25.00

$30.00

The return on your portfolio is closest to:

A) -0.5%

B) 13.5%

C) -2.5%

D) 14.5%

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