This is a multi-part question. You must answer both parts for full credit.

Tiffany Maniu bought 1000 shares of Moosepasture Gold Mines for $1 per share plus a commission to the online broker of $10. Six months later she sold the shares for $1.40 each, minus a commission to the online broker of $25. Her marginal tax rate is 35%.

a. What was her holding period return before tax on this investment?

36.1%

41.4%

39.6%

37.5%

38.8%

b. Assuming the holding period return was 40%, calculate her EAR on this investment:

85.2%

89.1%

92.7%

94.9%

96.0%