Mark has invested in Evu Confectioners. He owns 220 shares of stock in Evu Confectioners, with each share costing him \( \$ 14.79 \) apiece but paying a yearly dividend of \( \$ 2.03 \). Mark also owns three par value \( \$ 500 \) bonds from Evu Confectioners, each of which had a market value of 93.630 and which pay \( 8.8 \% \) interest. If Mark's broker charges a commission of \( \$ 55 \) per ten shares of stock bought or sold and a commission of \( 3 \% \) of the market value of each bond bought or sold, which aspect of Mark's investment in Evu Confectioners has the greater percent yield, and how much greater is it? a. The stocks have a yield 4.33 percentage points greater than that of the bonds. b. The stocks have a yield 0.88 percentage points greater than that of the bonds. c. The bonds have a yield 0.32 percentage points greater than that of the stocks. d. The bonds have a yield 3.68 percentage points greater than that of the stocks.

To determine which aspect of Mark's investment in Evu Confectioners has the greater percent yield, we need to calculate the yield for both the stocks and the bonds. ### Step 1: Calculate the yield for the stocks. 1. **Cost of the stocks:** - Number of shares = 220 - Cost per share = \( \$14.79 \) - Total cost of stocks = \( 220 \times 14.79 = \$3,253.80 \) 2. **Dividends from the stocks:** - Yearly dividend per share = \( \$2.03 \) - Total dividends = \( 220 \times 2.03 = \$446.60 \) 3. **Broker's commission for selling stocks:** - Commission for 10 shares = \( \$55 \) - Total commission for 220 shares = \( \frac{220}{10} \times 55 = 22 \times 55 = \$1,210 \) 4. **Net proceeds from selling stocks:** - Net proceeds = Total dividends - Commission = \( 446.60 - 1210 = -763.40 \) (This indicates a loss, but we will calculate yield based on the original investment.) 5. **Yield for stocks:** \[ \text{Yield} = \frac{\text{Total dividends}}{\text{Total cost}} \times 100 = \frac{446.60}{3253.80} \times 100 \approx 13.72\% \] ### Step 2: Calculate the yield for the bonds. 1. **Market value of the bonds:** - Number of bonds = 3 - Par value of each bond = \( \$500 \) - Market value per bond = \( 93.630\% \) of par value = \( 0.93630 \times 500 = \$468.15 \) - Total market value of bonds = \( 3 \times 468.15 = \$1,404.45 \) 2. **Interest from the bonds:** - Interest rate = \( 8.8\% \) - Annual interest per bond = \( 0.088 \times 500 = \$44 \) - Total interest = \( 3 \times 44 = \$132 \) 3. **Broker's commission for selling bonds:** - Commission = \( 3\% \) of market value = \( 0.03 \times 1404.45 = \$42.13 \) 4. **Net proceeds from selling bonds:** - Net proceeds = Total interest - Commission = \( 132 - 42.13 = 89.87 \) 5. **Yield for bonds:** \[ \text{Yield} = \frac{\text{Total interest}}{\text{Total market value}} \times 100 = \frac{132}{1404.45} \times 100 \approx 9.39\% \] ### Step 3: Compare the yields. - Yield for stocks: \( 13.72\% \) - Yield for bonds: \( 9.39\% \) ### Step 4: Calculate the difference in yields. \[ \text{Difference} = 13.72\% - 9.39\% = 4.33\% \] ### Conclusion: The stocks have a yield 4.33 percentage points greater than that of the bonds. Therefore, the correct answer is: **a. The stocks have a yield 4.33 percentage points greater than that of the bonds.**