BUSI 420 Exam 1 solutions complete correct answers

BUSI 420 Exam 1 solutions complete correct answers 

 

You purchased 5,600 shares in the New Pacific Growth Fund on January 2, 2019, at an offering price of $45.90 per share. The front-end load for this fund is 4 percent, and the back-end load for redemptions within one year is 2 percent. The underlying assets in this mutual fund appreciate (including reinvested dividends) by 5 percent during 2019, and you sell back your shares at the end of the year. If the operating expense ratio for the New Pacific Growth Fund is 1.75 percent, what is your total return from this investment? (Assume that the operating expense is netted against the fund’s return.) (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

A sector fund specializing in commercial bank stocks had average daily assets of $5.1 billion during the year. Suppose the annual operating expense ratio for the mutual fund is .60 percent, and the management fee is .35 percent. How much money did the fund’s management earn during the year? If the fund doesn’t charge any 12b-1 fees, how much were miscellaneous and administrative expenses during the year? (Do not round intermediate calculations. Enter your answer in dollars not in millions, e.g., 1,234,567.)

 

A closed-end fund has total assets of $345 million and liabilities of $180,000. Currently, 18 million shares are outstanding. What is the NAV of the fund? If the shares currently sell for $18.15, what is the premium or discount on the fund? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round the NAV answer to 2 decimal places. Enter the premium or discount as a percent rounded to 2 decimal places.)

 

The Argentina Fund has $530 million in assets and sells at a discount of 6.3 percent to NAV. If the quoted share price for this closed-end fund is $11.20, how many shares are outstanding? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

 

The World Income Appreciation Fund has current assets with a market value of $6.6 billion, 155 million shares outstanding, and a current market price quotation of $44.50. Calculate the front-end load. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

The fund has 63,000 shares and liabilities of $205,000. What is the NAV of the fund? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

The Aqua Liquid Assets Money Market Mutual Fund has a NAV of $1 per share. During the year, the assets held by this fund appreciated by 1.1 percent. If you had invested $30,000 in this fund at the start of the year, how many shares would you own at the end of the year? What will the NAV of this fund be at the end of the year?

 

The fund has 47,000 shares and liabilities of $171,000. Assume the fund is sold with a front-end load of 3.75 percent. What is the offering price of the fund? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Suppose you have $60,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $30 per share. You notice that a put option with a $30 strike is available with a premium of $6.00. Calculate your percentage return on the put option for the 6-month holding period if the stock price declines to $20 per share. (A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your 6-month return as a percent rounded to 2 decimal places.)

 

Suppose you buy 35 of the September corn futures contracts at the last price of the day. One month from now, the futures price of this contract is 465.375, and you close out your position. Calculate your dollar profit on this investment. (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Suppose you sell 17 of the May corn futures at the high price of the day. You close your position later when the price is 464.625. Ignoring commission, what is your dollar profit on this transaction? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

You find a stock selling for $50.12 that has a dividend yield of 3.2 percent and a PE ratio of 20.8. What is the earnings per share (EPS) for the company? (Round your answer to 2 decimal places.)

 

The contract size for platinum futures is 50 troy ounces. Suppose you need 400 troy ounces of platinum and the current futures price is $830 per ounce. How many contracts do you need to purchase? How much will you pay for your platinum? What is your dollar profit if platinum sells for $880 a troy ounce when the futures contract expires? What if the price is $780 at expiration? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole number.)

 

You just sold short 1,050 shares of Wetscope, Inc., a fledgling software firm, at $64 per share. You cover your short when the price hits $54.50 per share one year later. If the company paid $.81 per share in dividends over this period, what is your rate of return on the investment? Assume an initial margin of 70 percent. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

You believe that Rose, Inc., stock is going to fall and you’ve decided to sell 1,200 shares short. If the current share price is $88, construct the equity account balance sheet for this trade. Assume the initial margin is 100 percent. (Input all amounts as positive values.)

 

You sold short 650 shares of stock at a price of $35 and an initial margin of 70 percent. If the maintenance margin is 40 percent, at what share price will you receive a margin call? What is your account equity at this stock price? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 

You purchase 800 shares of 2nd Chance Co. stock on margin at a price of $61. Your broker requires you to deposit $28,000.

 

a. Suppose you sell the stock at a price of $72. What is your return? What would your return have been had you purchased the stock without margin? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

 

You purchase 950 shares of 2nd Chance Co. stock on margin at a price of $29. Your broker requires you to deposit $18,500.

 

You have $90,000 and decide to invest on margin. If the initial margin requirement is 60 percent, what is the maximum dollar purchase you can make? (Round your answer to the nearest whole number.)

 

Suppose you purchase 900 shares of stock at $74 per share with an initial cash investment of $35,000. If your broker requires a maintenance margin of 45 percent, at what share price will you be subject to a margin call? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Suppose you take out a margin loan for $81,000. The rate you pay is an effective rate of 6.2 percent. If you repay the loan in six months, how much interest will you pay? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

The rates of return on Cherry Jalopies, Inc., stock over the last five years were 19 percent, 11 percent, −7 percent, 6 percent, and 9 percent. Over the same period, the returns on Straw Construction Company’s stock were 16 percent, 20 percent, −3 percent, 3 percent, and 14 percent.

 

Calculate the variances and the standard deviations for Cherry and Straw. (Do not round intermediate calculations. Enter your variance as a decimal rounded to 5 decimal places. Enter your standard deviation as a percent rounded to 2 decimal places.)

 

Suppose you bought 950 shares of stock at an initial price of $54 per share. The stock paid a dividend of $.62 per share during the following year, and the share price at the end of the year was $49.

 

a. Compute your total dollar return on this investment. (A negative value should be indicated by a minus sign.)

 

b. What is the capital gains yield? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

c. What is the dividend yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

d. What is the total rate of return on the investment? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

You sold short 350 shares of stock at a price of $32 and an initial margin of 60 percent. If the maintenance margin is 300 percent, at what share price will you receive a margin call? What is your account equity at this stock price?

 

The standard deviation is a measure of:

 

Capital gains are included in the return on an investment:

 

Which one of the following had the highest average return for the period 1926-2016?

 

Sam purchased 500 shares of Microsoft stock which he has pledged to his broker as collateral for the loan in his margin account. This process of pledging securities is called:

 

A Roth IRA:

 

What is the maximum loss you can incur if you have a long position on a stock in a cash account?

 

Which one of the following describes a short position?

 

A fixed-income security is defined as:

 

A call option is an agreement that:

 

Bond trades are reported:

 

Money market instruments:

 

A mutual fund is created by which one of the following parties?

 

Which one of the following statements is true?

 

Trading symbols for mutual funds end in which letter?

 

Which one of the following is a general characteristic of a tax-managed fund?

 

The total dollar return on a share of stock is defined as the: 

 

The dividend yield is defined as the annual dividend expressed as a percentage of the: 

 

The capital gains yield is equal to: 

 

When the total return on an investment is expressed on a per-year basis it is called the: 

 

The risk-free rate is: 

 

The rate of return earned on a U.S. Treasury bill is frequently used as a proxy for the: 

 

The risk premium is defined as the rate of return on: 

 

The additional return earned for accepting risk is called the: 

 

A frequency distribution, which is completely defined by its average (mean) and variance or standard deviation, is referred to as a(n):

 

The arithmetic average return is the: 

 

The average compound return earned per year over a multi-year period is called the: 

 

The average compound return earned per year over a multi-year period when inflows and outflows are considered is called the:

 

Which one of the following statements is correct concerning the dividend yield and the total return?

 

An annualized return:

 

Stacey purchased 300 shares of Coulter Industries stock and held it for 4 months before reselling it. What is the value of "m" when computing the annualized return on this investment?

 

When we refer to the rate of return on an investment, we are generally referring to the: 

 

Which one of the following should be used to compare the overall performance of three different investments?

 

If you multiply the number of shares outstanding for a stock by the price per share, you are computing the firm's:

 

Which one of the following is considered the best method of comparing the returns on various-sized investments?

 

Which one of the following statements is correct based on the historical returns for the period 1926-2016?

 

Which category(ies) of investments had an annual rate of return that exceeded 100 percent for at least one year during the period 1926-2016?

 

For the period 1926-2016, the annual return on large-company stocks: 

 

Which one of the following had the highest risk premium for the period 1926-2016? 

 

Based on the period 1926-2016, the risk premium for U.S. Treasury bills was: 

 

Based on the period of 1926-2015, the risk premium for small-company stocks averaged:

 

The average risk premium on large-company stocks for the period 1926-2015 was: 

 

The average risk premium on long-term corporate bonds for the period 1926-2015 was: 

 

Which one of the following had the narrowest bell curve for the period 1926-2015? 

 

Which one of the following had the greatest volatility of returns for the period 1926-2015?

 

Which one of the following had the smallest standard deviation of returns for the period 1926-2015?

 

For the period 1926-2015, long-term government bonds had an average return that ________ the average return on long-term corporate bonds while having a standard deviation that _________ the standard deviation of the long-term corporate bonds.

 

The mean plus or minus one standard deviation defines the ________ percent probability range of a normal distribution.

 

Assume you own a portfolio that is invested 50 percent in large-company stocks and 50 percent in corporate bonds. If you want to increase the potential annual return on this portfolio, you could:

 

Which one of the following statements is correct? 

 

The wider the distribution of an investment's returns over time, the ________ the expected average rate of return and the _________ the expected volatility of those returns.

 

Which one of the following should be used as the mean return when you are defining the normal distribution of an investment's annual rates of return?

 

The geometric mean return on large-company stocks for the 1926-2015 period: 

 

You have owned a stock for seven years. The geometric average return on this investment for those seven years is positive even though the annual rates of return have varied significantly. Given this, you know the arithmetic average return for the period is:

 

The geometric return on an investment is approximately equal to the arithmetic return: 

 

Blume's formula is used to: 

 

One year ago, you purchased 200 shares of Southern Foods common stock for $39.50 a share. Today, you sold your shares for $35.40 a share. During this past year, the stock paid $1.25 in dividends per share. What is your dividend yield on this investment?

 

You purchased a stock for $25.50 a share, received a dividend of $0.70 per share, and sold the stock after one year for $28.55 a share. What was your dividend yield on this investment?

 

One year ago, you purchased 500 shares of stock at a cost of $10,500. The stock paid an annual dividend of $1.10 per share. Today, you sold those shares for $23.90 each. What is the capital gains yield on this investment?

 

Today, you sold 800 shares of DeSoto Inc., for $57.60 a share. You bought the shares one year ago at a price of $61.20 a share. Over the year, you received a total of $500 in dividends. What is your capital gains yield on this investment?

 

One year ago, you purchased 300 shares of Southern Cotton at $32.60 a share. During the past year, you received a total of $280 in dividends. Today, you sold your shares for $35.80 a share. What is your total return on this investment?

 

You purchased a stock for $50.00 a share and resold it one year later. Your total return for the year was 11.5 percent and the dividend yield was 2.8 percent. At what price did you resell the stock?

 

A stock sold for $25 at the beginning of the year. The end of year stock price was $25.70. What is the amount of the annual dividend if the total return for the year was 7.7 percent?

 

Todd purchased 600 shares of stock at a price of $68.20 a share and received a dividend of $1.42 per share. After six months, he resold the stock for $71.30 a share. What was his total dollar return?

 

Christine owns a stock that dropped in price from $43.80 to 39.49 over the past year. The dividend yield on that stock is 1.8 percent. What is her total return on this investment for the year?

 

You have been researching a company and have estimated that the firm's stock will sell for $44 a share one year from now. You also estimate the stock will have a dividend yield of 2.18 percent. How much are you willing to pay per share today to purchase this stock if you desire a total return of 15 percent on your investment?

 

Shane purchased a stock this morning at a cost of $13 a share. He expects to receive an annual dividend of $0.27 a share next year. What will the price of the stock have to be one year from today if Shane is to earn a 8 percent rate of return on this investment?

 

Ellen just sold a stock and realized a 5.8 percent return for a 5-month holding period. What was her annualized rate of return?

 

You purchased a stock eight months ago for $36 a share. Today, you sold that stock for $41.50 a share. The stock pays no dividends. What was your annualized rate of return?

 

Eight months ago, you purchased 300 shares of a non-dividend paying stock for $27 a share. Today, you sold those shares for $31.59 a share. What was your annualized rate of return on this investment?

 

Jack owned a stock for five months and earned an annualized rate of return of 6 percent. What was the holding period return?

 

Scott purchased 200 shares of Frozen Foods stock for $48 a share. Four months later, he received a dividend of $0.22 a share and also sold the shares for $42 each. What was his annualized rate of return on this investment?

 

A stock has an average historical risk premium of 5.6 percent. The expected risk-free rate for next year is 2.4 percent. What is the expected rate of return on this stock for next year?

 

Last year, ABC stock returned 11.43 percent, the risk-free rate was 3.0 percent, and the inflation rate was 2.5 percent. What was the risk premium on ABC stock?

 

Over the past four years, Jellystone Quarry stock produced returns of 12.5, 15.1, 8.7, and 2.6 percent, respectively. For the same time period, the risk-free rate 4.7, 5.3, 3.9, and 3.4 percent, respectively. What is the arithmetic average risk premium on this stock during these four years?

 

Over the past five years, Teen Clothing stock produced returns of 18.7, 5.8, 7.9, 10.8, and 11.6 percent, respectively. For the same five years, the risk-free rate 5.2, 3.4, 2.8, 3.4, and 3.9 percent, respectively. What is the arithmetic average risk premium on Teen Clothing stock for this time period?

 

Over the past ten years, large-company stocks have returned an average of 9.8 percent annually, long-term corporate bonds have earned 4.6 percent, and U.S. Treasury bills have returned 3.0 percent. How much additional risk premium would you have earned if you had invested in large-company stocks rather than long-term corporate bonds over those ten years?

 

An asset had annual returns of 12, 18, 6, -9, and 5 percent, respectively, for the last five years. What is the variance of these returns?

 

Over the past five years, Southwest Railway stock had annual returns of 10, 14, -6, 7.5, and 16 percent, respectively. What is the variance of these returns?

 

An asset had returns of 7.7, 5.4, 3.6, -4.2, and -1.3 percent, respectively, over the past five years. What is the variance of these returns?

 

An asset had annual returns of 13, 10, -14, 3, and 36 percent, respectively, for the past five years. What is the standard deviation of these returns?

 

Over the past four years, a stock produced returns of 13, 6, -5, and 18 percent, respectively. What is the standard deviation of these returns?

 

Downtown Industries common stock had returns of 7.2, 11.5, 10.5, and 7.5 percent, respectively, over the past four years. What is the standard deviation of these returns?

 

An asset has an average annual historical return of 11.6 percent and a standard deviation of 17.8 percent. What range of returns would you expect to see 95 percent of the time?

 

A stock has an average historical return of 11.3 percent and a standard deviation of 20.2 percent. Which range of returns would you expect to see approximately two-thirds of the time?

 

An asset has an average historical rate of return of 13 percent and a variance of 0.0106. What range of returns would you expect to see approximately two-thirds of the time?

 

Jeremy owns a stock that has historically returned 7.5 percent annually with a standard deviation of 10.2 percent. There is only a 0.5 percent chance that the stock will produce a return greater than_________ percent in any one year.

 

Jefferson Mills stock produced returns of 14.8, 22.6, 5.9, and 9.7 percent, respectively, over the past four years. During those same years, U.S. Treasury bills returned 3.8, 4.6, 4.8, and 4.0 percent, respectively, for the same time period. What is the variance of the risk premiums on Jefferson Mills stock for these four years?

 

Over the past four years, the common stock of Jess Electronics Co. produced annual returns of 7.2, 5.8, 11.2, and 13.6 percent, respectively. Treasury bills produced returns of 3.4, 3.3, 4.1, and 4.0 percent, respectively over the same period. What is the standard deviation of the risk premium on Jess Electronics Co. stock for this time period?

 

Big Town Markets common stock returned 13.8, 14.2, 9.7, 5.3, and 12.2 percent, respectively, over the past five years. What is the arithmetic average return?

 

Over the past four years, Hi-Tech Development stock returned 35.2, 38.8, 18.4, and -32.2 percent annually. What is the arithmetic average return?

 

You own a stock that has produced an arithmetic average return of 8.6 percent over the past five years. The annual returns for the first four years were 16, 11, -19, and 3 percent, respectively. What was the rate of return on the stock in year five?

 

An asset had annual returns of 17, -35, -18, 24, and 6 percent, respectively, over the past five years. What is the arithmetic average return?

 

Celsius stock had year end prices of $42, $37, $44, and $46 over the past four years, respectively. What is the arithmetic average rate of return?

 

Blackstone Mines stock returned 10.5, 17.2, -9.0, and 14.5 percent over the past four years, respectively. What is the geometric average return?

 

You invested $5,000 eight years ago. The arithmetic average return on your investment is 10.6 percent and the geometric average return is 10.23 percent. What is the value of your portfolio today?

 

Joanne invested $15,000 six years ago. Her arithmetic average return on this investment is 8.72 percent, and her geometric average return is 8.50 percent. What is Joanne's portfolio worth today?

 

A stock produced annual returns of 8.3, -21, 12, 42, and 9 percent over the past five years, respectively. What is the geometric average return?

 

Over the past five years, an investment produced annual returns of 16.5, 21, -18, 4, and 17 percent, respectively. What is the geometric average return?

 

A portfolio had an original value of $7,400 seven years ago. The current value of the portfolio is $11,898. What is the average geometric return on this portfolio?

 

An initial investment of $41,800 fifty years ago is worth $1,533,913 today. What is the geometric average return on this investment?

 

A stock had year end prices of $24, $27, $32, and $26 over the past four years, respectively. What is the geometric average return?

 

The geometric return on a stock over the past 10 years was 7.9 percent. The arithmetic return over the same period was 8.8 percent. What is the best estimate of the average return on this stock over the next 5 years?

 

The geometric return on an asset over the past 12 years has been 14.50 percent. The arithmetic return over the same period was 14.96 percent. What is the best estimate of the average return on this asset over the next 5 years?

 

A stock has an average arithmetic return of 10.55 percent and an average geometric return of 10.41 percent based on the annual returns for the last 15 years. What is projected average annual return on this stock for the next 10 years?

 

Leeanne owns a stock that has an average geometric return of 12.30 percent and an average arithmetic return of 12.55 percent over the past six years. What average annual rate of return should Leeanne expect to earn over the next four years?

 

Tom decides to begin investing some portion of his annual bonus, beginning this year with $6,000. In the first year he earns an 8 percent return and adds $3,000 to his investment. In the second his portfolio loses 4 percent but, sticking to his plan, he adds $1,000 to his portfolio. In this year his portfolio returns 2 percent. What is Tom's dollar-weighted average return on his investments?

 

Bill has been adding funds to his investment account each year for the past 3 years. He started with an initial investment of $1,000. After earning a 10 percent return the first year, he added $3,000 to his portfolio. In this year his investments lost 5 percent. Undeterred, Bill added $2,000 the next year and earned a 2 percent return. Last year, discouraged by the recent results, he only added $500 to his portfolio, but in this final year his investments earned 8 percent. What was Bill's dollar-weighted average return for his investments?

 

John began his investing program with a $5,500 initial investment. The table below recaps his returns each year as well as the amounts he added to his investment account. What is his dollar-weighted average return?

Time Investment Return

0 $ 5,500 8.5 %

1 $ 2,000 - 5.0 %

2 $ 2,600 4.5 %

3 $ 3,000 9.0 %

4 $ 900 - 2.5 %

 

Jim began his investing program with a $4,000 initial investment. The table below recaps his returns each year as well as the amounts he added to his investment account. What is his dollar-weighted average return?

TIME INVESTMENT RETURN

0 $ 4,000 10 %

1 $ 2,800 -5 %

2 $ 900 2 %

3 $ 1,600 8 %

4 $ 2,100 -3 %

5 $ 2,400 6 %

 

One year ago, you purchased 300 shares of stock at a cost of $6,000. The stock paid an annual dividend of $1.10 per share. Today, you sold those shares for $22.50 each. What is the capital gains yield on this investment?

 

Eileen just sold a stock and realized a 6.25 percent return for a 7-month holding period. What was her annualized rate of return?

 

Downtown Industries common stock had returns of 5.2, 10.3, 9.3, and 9.5 percent, respectively, over the past four years. What is the standard deviation of these returns?

 

You own a stock that has produced an arithmetic average return of 5.6 percent over the past five years. The annual returns for the first four years were 15, 10, -18, and 8 percent, respectively. What was the rate of return on the stock in year five?

 

A stock produced annual returns of 8.5, -18, 15, 17, and 12 percent over the past five years, respectively. What is the geometric average return?

 

Louis owns a stock that has an average geometric return of 10.50 percent and an average arithmetic return of 11.00 percent over the past six years. What average annual rate of return should Louis expect to earn over the next four years?

 

John began his investing program with a $5,500 initial investment. The table below recaps his returns each year as well as the amounts he added to his investment account. What is his dollar-weighted average return?

Time Investment Return

0 $ 6,500 7.5 %

1 $ 2,500 - 4.0 %

2 $ 3,100 5.0 %

3 $ 3,000 8.0 %

4 $ 800 - 1.5 %

 

Market timing is the: 

 

Asset allocation is the: 

 

Jack is researching chemical companies in an effort to determine which company's stock he should purchase. This process is known as:

 

A brokerage account in which purchases can be made using credit is referred to as which type of account?

 

Kay just purchased $5,000 worth of stock. She paid $3,000 in cash and borrowed $2,000. In this example, the term margin refers to:

 

Which one of the following best describes the term "initial margin"? 

 

The minimum equity that must be maintained at all times in a margin account is called the:

 

When your equity position in a security is less than the required amount, your brokerage firm will issue a:

 

Staci owns 1,000 shares of stock in a margin account. Those shares are most likely held in:

 

This morning, Josh sold 800 shares of stock that he did not own. This sale is referred to as a:

 

The amount of common stock held in short positions is referred to as the short: 

 

A company that owns income-producing real estate such as an apartment complex or a retail shopping center is called a(n):

 

An investor who has a resource constraint: 

 

To be considered liquid, a security must: 

 

Walter is trying to decide whether he wants to purchase shares in General Motors, Ford, or Honda, all of which are auto manufacturers. Walter is making a(n) _______ decision.

 

Brooke has decided to invest 55 percent of her money in large company stocks, 40 percent in small company stocks, and 5 percent in cash. This is a(n) ______decision.

 

Kay plans to retire in two years and wishes to liquidate her account at that time. Kay has a ________ constraint.

 

The SIPC: 

 

The determination of which individual stocks to purchase within a particular asset class is referred to as:

 

An investor who follows a fully active strategy will: 

 

Which one of the following decisions falls under the category of asset allocation? 

 

Tom recently inherited a large sum of money that he wants to invest in the stock market. Since he has no investment experience, he has decided that he would like to work with a professional who can explain the market to him and also manage his funds for him. Ted most likely needs the services offered by a(n):

 

Which one of the following statements is correct? 

 

Martin has an investment account with William, who is a broker with City Brokerage. Martin believes that William has mishandled his account by churning it. If he files a complaint against William seeking compensation, the case will most likely be decided by:

 

You currently have $5,000 in cash in your brokerage account. You decide to spend $8,000 to purchase shares of stock and borrow $3,000 from your broker to do so. Which type of brokerage account do you have?

 

Which one of the following statements is correct? 

 

Staci just used $5,000 of cash plus a $2,500 margin loan to purchase $7,500 worth of stock. This is the only transaction in her brokerage account. According to her account balance sheet, she now has account equity of:

 

Ann just purchased $10,000 of stock. She paid $8,000 in cash and borrowed the remaining $2,000 needed to pay for this purchase. If you constructed a balance sheet reflecting this transaction, the total assets would be:

 

Anita wants to buy $10,000 of securities in her margin account. Her advisor has informed her that she must pay a minimum of $7,000 in cash and maintain a minimum equity position of 30 percent. The initial margin requirement is ________ percent and the maintenance margin is ________ percent.

 

The absolute minimum initial margin requirement is set by the: 

 

You open a margin account with a local broker and purchase shares of stock. The house maintenance margin requirement for your account is set by:

 

If you opt to purchase shares of stock on margin rather than with cash, you will: 

 

What is the purpose of a margin call? 

 

If you ignore a margin call, your broker: 

 

Lauren Mitchell has a margin account with a local brokerage firm, RL Brokers. She recently purchased 200 shares of Abbot Industries common stock that trades on the New York Stock Exchange (NYSE). These shares are held in street name and are registered under the name of:

 

Which one of the following is generally true concerning securities held in street name? 

 

Sarah has a brokerage account with Jeff, who is a money manager with Downtown Brokers. Sarah pays an all-inclusive annual fee to the firm and Jeff manages her funds. She pays no trading costs or commissions. Which one of the following best describes this type of account?

 

A discretionary account: 

 

An investor with a long position in a security will make money: 

 

On August 8 of this year, Brent sold 500 shares of ADO stock for $24 a share. On September 6 of this year, he purchased 500 shares of ADO stock to cover his position. The transaction on August 8:

 

A short sale: 

 

If you benefit when a security decreases in value, you have a ________ position in the security.

 

The maximum loss you can incur on a short sale is: 

 

Tate Industries stock is selling for $20 a share. You would like to purchase as many shares of this stock as you can. Your margin account currently has available cash of $4,500 and the initial margin requirement is 75 percent. What is the maximum number of shares you can buy?

 

Todd has a margin account with $17,400 in available cash. The initial margin is 70 percent and the maintenance margin is 30 percent. What is the maximum number of shares he can purchase if the price per share is $44?

 

Theresa has a margin account with a 60 percent initial margin requirement and a 35 percent maintenance margin. What is the maximum dollar amount of stock she can purchase if her cash balance in the account is $35,300?

 

You recently purchased 800 shares of Southern Timber stock for $35 a share. Your broker required a cash payment of $19,600, plus trading costs, for this purchase. What was the initial margin requirement?

 

Donna recently purchased 500 shares of Deltona stock for $33.00 a share. Her broker required a cash payment of $10,725, plus trading costs, for the purchase. What is the initial margin requirement on this particular stock?

 

Suzette recently purchased 300 shares of Nu Electronics stock for $4.40 a share. Her broker required a cash payment of $1,320, plus trading costs, for the purchase. What is the initial margin requirement on this stock?

 

Stephen is purchasing 700 shares of KPT, Inc., stock at a price per share of $20.80. What is the minimum amount the Federal Reserve will require Stephen to pay in cash for this purchase?

 

Alfonso purchased 600 shares of Crosswinds, Inc., stock on 60 percent margin when the stock was selling for $37 a share. The stock is currently selling for $32 a share. What is his current equity position?

 

You purchased 1,000 shares of stock at $42 a share. The stock is currently selling for $45 a share. The initial margin was 70 percent and the maintenance margin is 30 percent. What is your current margin position?

 

You own 500 shares of a stock that you purchased on margin at a price per share of $20.12. The stock is currently valued at $24 a share. Your broker advised you today that your minimum equity position for this purchase is $4,800 as of today. What is the maintenance margin percentage?

 

Sun Lee purchased 1,500 shares of Franklin Metals stock for $16.80 a share. The stock was purchased with an initial margin of 65 percent. The maintenance margin is 30 percent. The stock is currently selling for $17.10 a share. What is the minimum dollar amount of equity that he must have in this stock today to avoid a margin call?

 

Rosita purchased 300 shares of a stock for $37 a share. Today, the stock is selling for $41 a share. The initial margin requirement is 70 percent and the maintenance margin is 30 percent. Rosita had to pay ________ in cash to purchase the stock and must have at least ________ in equity today.

 

Allan purchased 500 shares of stock on margin for $31.75 a share and sold the shares five months later for $34.50 a share. The initial margin requirement was 65 percent and the maintenance margin was 30 percent. The interest rate on the margin loan was 8.5 percent. He received no dividend income. What was his holding period return?

 

Tony purchased 100 shares of T-Rex stock for $43 a share. On the same day, Sam also purchased 100 shares of T-Rex stock for $43 a share. Tony paid cash for his purchase while Sam used margin. The initial margin requirement on this stock is 60 percent while the maintenance margin is 40 percent. Both Tony and Sam sold their shares after eight months at a price of $40 a share. The stock pays no dividends. Tony had a holding period percentage return of ________ percent as compared to Sam's _________ percent return. Ignore margin interest and trading costs.

 

Stacy purchased 400 shares of stock for $38 a share. She sold those shares six months later for $34 a share. The initial margin requirement is 80 percent and the maintenance margin is 40 percent. Ignore margin interest and trading costs. If she purchased the shares for cash her holding period return would be ________ percent as compared to ________ percent if she had used margin.

 

A stock was purchased for $45 a share and sold ten months later for $48 a share. If the shares were purchased totally with cash the holding period return would be ________ percent as compared to ________ percent if the purchase was made using 70 percent margin. Ignore trading costs and margin interest.

 

You purchased a stock for $18.45 a share using 70 percent margin. You sold the stock seven months later for $19.85 a share. You did not receive any dividend income. What was your holding period percentage return on this investment? Ignore trading costs and margin interest.

 

Rudolfo purchased 900 shares of stock for $62.20 a share and sold them ten months later for $64.60 a share. The initial margin requirement on this stock is 75 percent and the maintenance margin is 40 percent. Ignoring dividends and costs, what is his holding period return?

 

Mary purchased 100 shares of Best Foods stock on margin at a price of $49 a share. The initial margin requirement is 65 percent and the maintenance margin is 30 percent. What is the lowest the stock price can go before Mary receives a margin call?

 

You purchased 800 shares of stock for $49.20 a share. The initial margin requirement is 65 percent and the maintenance margin is 35 percent. What is the lowest the stock price can go before you receive a margin call?

 

Aaron purchased 300 shares of a technology stock for $16.80 a share. The initial margin requirement on this stock is 85 percent and the maintenance margin is 60 percent. What is the lowest the stock price can go before he receives a margin call?

 

You purchased 500 shares of stock for $28.50 a share. The initial margin requirement is 65 percent and the maintenance margin is 35 percent. What is the maximum percentage decrease that can occur in the stock price before you receive a margin call?

 

Nelson purchased 1,600 shares of stock for $18.75 a share. The initial margin requirement is 70 percent and the maintenance margin is 40 percent. What is the maximum percent by which the stock price can decline before he receives a margin call?

 

You purchase 500 shares of stock on margin at a cost per share of $22. The initial margin requirement is 60 percent. The effective interest rate on the margin loan is 6.4 percent. How much interest will you pay if you repay the loan in four months?

 

Sarah purchased 600 shares of Detroit Motors stock at a price of $60 a share. The initial margin requirement is 70 percent and the maintenance margin is 30 percent. The effective interest rate on the margin loan is 6.5 percent. How much margin interest will she pay if she repays the loan in seven months?

 

Today, you are purchasing 100 shares of stock on margin. The purchase price per share is $35. The initial margin requirement is 70 percent and the maintenance margin is 30 percent. The call money rate is 4.5 percent and you are charged 1.6 percent over that rate. What will your rate of return be if you sell your shares one year from now for $37 a share? Ignore dividends.

 

Seven months ago, you purchased 400 shares of stock on margin. The initial margin requirement on your account is 60 percent and the maintenance margin is 30 percent. The call money rate is 4.8 percent and you pay 1.85 percent above that rate. The purchase price was $16 a share. Today, you sold these shares for $18.00 each. What is your annualized rate of return?

 

Eight months ago, Freda purchased 500 shares of stock on margin at a price per share of $35. The initial margin requirement on her account is 70 percent and the maintenance margin is 40 percent. The call money rate is 4.75 percent and she pays 2 percent above that rate. Today, she sold these shares for $37.50 each. What is her annualized rate of return?

 

Three months ago, Trevor purchased 500 shares of stock at a cost per share of $64.20. The purchase was made on margin with an initial margin requirement of 65 percent. Trevor pays 1.6 percent over the call money rate of 4.8 percent. What will his total dollar return be on this investment if he sells his shares today at a price per share of $63.40?

Ignore dividends.

 

Robin sold 800 shares of a non-dividend paying stock this morning for a total of $29,440. She had purchased these shares on margin nine months ago at a cost per share of $35. The initial margin requirement on this stock is 60 percent and the maintenance margin is 30 percent. Robin pays 1.2 percent over the call money rate of 4.9 percent. What is her total dollar return on this investment?

 

You recently purchased 200 shares of stock at a cost per share of $32.50. The initial margin requirement on this stock is 75 percent and the maintenance margin is 50 percent. The stock is currently valued at $35.00 a share. What is your current margin position? Ignore margin interest.

 

You recently purchased 1,300 shares of stock at a cost per share of $54.10. The initial margin requirement on this stock is 60 percent and the maintenance margin is 30 percent. The stock is currently valued at $42.30 a share. What is your current margin position?

Ignore margin interest.

 

Yvette recently purchased 500 shares of stock at a cost per share of $43.50. The initial margin requirement on this stock is 75 percent and the maintenance margin is 40 percent. The stock is currently valued at $44.75 a share. What is her current margin position?

Ignore margin interest.

 

You short sold 700 shares of a stock at $25 a share. The initial margin requirement is 75 percent and the maintenance margin is 35 percent. What is the amount of your total liability for this transaction as initially shown on your account balance sheet?

 

Elizabeth short sold 400 shares of stock at $72 a share. One month later, she covered the short at a price of $68. What was her total dollar return on this investment?

 

Today, you short sold 1,100 shares of Jasper Industrial stock at $48 a share. The initial margin is 60 percent and the maintenance margin is 30 percent. Which one of the following is correct concerning your account balance sheet for this transaction?

 

Mark short sold 500 shares of stock at $12.50 a share. The initial margin is 80 percent and the maintenance margin is 50 percent. The stock is currently selling for $9.80 a share. What is Matt's account equity at this time? Ignore margin interest.

 

You short sold 500 shares of Jasper stock at $41 a share at an initial margin of 60 percent. What is the highest the stock price can go before you receive a margin call if the maintenance margin is 40 percent?

 

Jennifer believes that Northern Wine stock is going to decline in value so she is short selling 1,000 shares at $32 a share. Her initial margin requirement is 70 percent and the maintenance margin is 30 percent. What is the highest the stock price can go before she receives a margin call?

 

Mike short sold 400 shares of DeSoto Lumber stock at $22 a share at an initial margin of 70 percent. The maintenance margin is 35 percent. What is the highest the stock price can go before he receives a margin call?

 

The short interest on Blue Water Cruisers stock was 351,900 when the market opened this morning. During the day, 288,500 shares were covered and 151,600 shares were sold short. What was the short interest on this stock at the end of the trading day?

 

You just sold 1,200 shares of stock short at a price per share of $13.50. The initial margin requirement is 60 percent and the maintenance margin is 30 percent. What is your initial equity position?

 

Last week, you sold 300 shares of ABC stock for $6,300. The sale was a short sale with an initial margin requirement of 70 percent. The maintenance margin is 40 percent. Some positive news concerning the company was released last night and the stock price jumped this morning to $28 a share. What is your current margin position in this stock?

 

Recently, you sold 1,000 shares of stock for $21,400. The sale was a short sale with an initial margin requirement of 60 percent. The maintenance margin is 30 percent. The stock is currently trading at $27.50 a share. What is your current margin position in this stock?

 

Recently, you sold 500 shares of stock for $16.60 a share. The sale was a short sale with an initial margin requirement of 70 percent. The maintenance margin is 35 percent. The stock is currently trading at $17.80 a share. What is your current short position in this stock?

 

Neshoba Industries stock is selling for $33 a share. You would like to purchase as many shares of this stock as you can. Your margin account currently has available cash of $7,000 and the initial margin requirement is 65 percent. What is the maximum number of shares you can buy?

 

Sam is purchasing 800 shares of RPT, Inc., stock at a price per share of $15.50. What is the minimum amount the Federal Reserve will require Sam to pay in cash for this

purchase?

 

Louis purchased 300 shares of stock on margin for $22.15 a share and sold the shares eleven months later for $24.50 a share. The initial margin requirement was 75 percent and the maintenance margin was 30 percent. The interest rate on the margin loan was 8.5 percent. He received no dividend income. What was his holding period return?

 

Marcia purchased 100 shares of Hyde Foods stock on margin at a price of $35 a share. The initial margin requirement is 65 percent and the maintenance margin is 35 percent. What is the lowest the stock price can go before Marcia receives a margin call?

 

Sarah purchased 700 shares of Detroit Motors stock at a price of $45 a share. The initial margin requirement is 70 percent and the maintenance margin is 30 percent. The effective interest rate on the margin loan is 6.5 percent. How much margin interest will she pay if she repays the loan in five months?

 

You recently purchased 200 shares of stock at a cost per share of $22.25. The initial margin requirement on this stock is 75 percent and the maintenance margin is 50 percent. The stock is currently valued at $24.00 a share. What is your current margin position? Ignore margin interest.

 

Rylee short sold 600 shares of stock at $16.25 a share. The initial margin is 75 percent and the maintenance margin is 50 percent. The stock is currently selling for $19.50 a share. What is Rylee's account equity at this time? Ignore margin interest.

 

Last week, you sold 800 shares of Ace stock for $24,000. The sale was a short sale with an initial margin requirement of 70 percent. The maintenance margin is 40 percent. Some positive news concerning the company was released last night and the stock price jumped this morning to $35 a share. What is your current margin position in this stock?

 

Which one of the following is the best definition of a money market instrument? 

 

The annual interest payment divided by the current price of a bond is called the: 

 

A security originally sold by a business or government to raise money is called a(n): 

 

A financial asset that represents a claim on another financial asset is classified as a ________ asset.

 

A futures contract is an agreement: 

 

An agreement that grants the owner the right, but not the obligation, to buy or sell a specific asset at a specified price during a specified time period is called a(n) ________ contract.

 

A contract that grants its buyer the right, but not the obligation, to sell an asset at a specified price is called a:

 

The price paid to purchase an option contract is called the: 

 

The amount of money per share that will be received when a put option on stock is exercised is called the ________ price.

 

Riverview Chemical recently issued some debt that had an original maturity of nine months. This debt is best classified as a(n):

 

Money market instruments issued by a corporation: 

 

Which one of the following is classified as a fixed-income security? 

 

Which one of the following sentences is correct concerning fixed-income securities? 

 

Assume a semi-annual coupon bond matures in 3 years, has a face value of $1,000, a current market price of $989, and a 5 percent coupon. Which one of the following statements is correct concerning this bond?

 

The Alpha Industrial bonds pay an annual interest payment equal to 5.875 percent of: 

 

What was yesterday's closing price on the Beta Movers bond? 

 

What is the current price of a $1,000 face value Alpha Industrial bond? 

 

Which one of the following represents a residual ownership interest in the issuer? 

 

Which one of the following statements related to common stock is correct?

 

Preferred stock: 

 

Preferred stock: 

 

How many whole shares of Ditch Digger stock traded today? 

 

What is today's closing price per share of Buy Rite stock? 

 

Which one of the following is a derivative asset? 

 

Great Lakes Farm agreed this morning to sell General Mills 25,000 bushels of wheat six months from now at a price per bushel of $9.75. This is an example of a:

 

Cole's Jewelers purchased a futures contract on 200 ounces of gold to be exchanged 3-months from now. As the contract holder, Cole's Jewelers:

 

Futures contracts: 

 

At the time a futures contract is written: 

 

Which of the following are generally included in a standardized futures contract?

I. delivery date

II. quantity to be delivered

III. specific item to be delivered

IV. delivery location

 

Harvest Fields sold ten September futures contracts on oats. Harvest Fields will: 

 

Investing in a futures contract: 

 

By how much did today's settlement price per bushel for the Mar 08 wheat futures contract increase over the prior day's settlement price?

 

What are the lowest and highest prices per bushel at which the March 08 wheat futures contract sold today?

 

What price would you have paid today per bushel for the Mar 08 wheat futures contract if you bought the contract at the final price of the day?

 

If you want the right, but not the obligation, to buy a stock at a specified price you should:

 

If you want the right, but not the obligation, to sell a stock at a specified price you should:

 

If you are willing to buy a stock and you wish to receive the option premium you should: 

 

If you are willing to sell a stock and wish to receive the option premium you should: 

 

A European put option grants the holder the right to: 

 

An American call option grants the holder the right to: 

 

When a put option is exercised, the: 

 

You will earn a profit as the owner of a call option if the price of the underlying asset: 

 

The seller of a naked call is betting that the price of the underlying asset will: 

 

Options expire on the ________ of the expiration month. 

 

The price you will pay (per underlying share) to buy the 50 call option on JL stock is: 

 

What price will you receive (per underlying share) if you sell the 47.50 call option on JL stock?

 

What was the prior day's closing price on the 50 call option on JL stock? 

 

You own twelve (12) 6.25 percent coupon bonds with a total maturity value of $12,000. How much will you receive every six months as an interest payment?

 

A 5.5 percent coupon bond is currently quoted at 88.3 and has a face value of $1,000. What is the amount of each semi-annual coupon payment if you own four (4) of these bonds?

 

A $1,000 face value bond has a 6.85 percent semi-annual coupon and sells for $980.00. What is the current yield?

 

A 7 percent coupon bond has a face value of $1,000 and pays interest annually. The current yield is 6.8 percent. What is the current price of this bond?

Use the following bond quotes to answer this question:

 

The Zeus Company bond pays interest semi-annually. You own six of these bonds. What is the amount you will receive as your next interest payment?

Use the following bond quotes to answer this question:

Company Coupon Maturity High Low Last Change Yield

Talliru Co. 7.60 Nov 2012 100.05 99.64 99.89 0.02 ?

Zeus 8.25 Apr 2016 102.41 101.87 102.03 -0.10 ?

 

If you purchase five Zeus bonds, the cost will be ________ and the annual interest income will be _______ .

Use the following stock quotes to answer this question:

52 WEEK

Company Volume Div Close Chg High Low

Buy Rite 5,078,420 1.40 101.13 -0.05 04.90 82.13

Cloverdale 47,126,338 0.72 21.48 +0.01 30.15 16.80

Ditch Digger 11,298,006 0.48 48.19 -0.13 55.62 48.19

 

58) What is the current yield on Buy Rite stock? 

Use the following stock quotes to answer this question:

52 WEEK

Company Volume Close Chg High Low

Aldridge Inc 32,653,080 34.50 -0.20 41.60 33.90

Baker Co 11,508,900 78.10 -2.30 82.30 74.60

Chelsea Ind 51,873,450 48.20 4.10 48.60 29.40

 

John owns 300 shares of Aldridge stock. What is the current value of his shares? 

Use the following stock quotes to answer this question:

52 WEEK

Company Volume Close Chg High Low

Aldridge Inc 32,653,080 34.50 -0.20 41.60 33.90

Baker Co 11,508,900 78.10 -2.30 82.30 74.60

Chelsea Ind 51,873,450 48.20 4.10 48.60 29.40

 

Aldridge, Inc. pays an annual dividend of $1.18. What is the dividend yield on this stock?

 

Baker Company has 136,000 shares of stock outstanding and a PE ratio of 18. What was the net income for the most recent four quarters?

 

What was the previous day's closing price for Baker Co. stock?

 

Vivian purchased 700 shares of Aldridge, Inc. stock at what turns out to be the lowest price during the past year. How much has the value of her shares changed since she made this investment?

 

What is the latest earnings per share for Baker Co. stock if the PE is 22? 

 

A pension fund purchased 20 round lots of Chelsea Company stock at the closing price of the day yesterday. What was the cost of that purchase?

Use the following soybean futures quotes to answer this question.

Soybeans: 5,000 bushels, cents and 1 / 8 ths of a cent per bushel

Exp Last Net Chg Open High Low Settle

08 Sep 1314'0 -3'4 1340'2 1340'6 1313'4 1314'0

08 Nov 1285'2 +4'2 1306'0 1312'2 1280'0 1285'2

 

Last week, you purchased four November 08 soybean futures contracts when the price quote was 1300´6. What is your current profit or loss on this investment?

Use the following soybean futures quotes to answer this question:

Soybeans: 5,000 bushels, cents and 1 / 8 ths of a cent per bushel

Exp Last Net Chg Open High Low Settle

08 Sep 1314'0 -3'4 1340'2 1340'6 1313'4 1314'0

08 Nov 1285'2 +4'2 1306'0 1312'2 1280'0 1285'2

 

Julie was lucky enough to purchase two September 08 futures contracts on soybeans when the contracts were at the lowest price of the day. What is Julie's total profit or loss as of the end of the day?

 

What was the total price fluctuation on one September 08 soybeans contract today? 

Use the following soybean futures quotes:

Soybeans: 5,000 bushels, cents and 1 / 8 ths of a cent per bushel

Exp Last Net Chg Open High Low Settle

08 Sep 1318'6 -2'4 1320'2 1330'6 1308'4 1318'6

08 Nov 1287'2 +0'2 1288'0 1327'4 1276'6 1287'2

 

You purchased four November 08 futures contracts on soybeans when they first became available this morning. Your investment has been worth as little as_________ and as much as _______ _.

 

You purchased five August 13 futures contracts on soybeans at a price quote of 1056'6. Each contract is for 5,000 bushels with the price quoted in cents and 1/8 ths of a cent per bushel. Assume the contract price is 1061'4 when you close out your contract six weeks from now. What will be your total profit or loss on this investment?

 

You own one futures contract on gold that you purchased at a quoted price of 1,448.5. The current price quote is 1608.8. The contract size is 100 ounces and the quotes are expressed in dollars and cents per ounce. What is your current profit or loss on this investment?

 

You would like to lock in the selling price on 60,000 bushels of wheat, which you plan to harvest and deliver to the market in September. The September futures price quote is currently 902´6. If you write September futures contracts on your wheat, you will be guaranteed a total price of ________ for your crop. Each contract is quoted in cents and 1/8 ths of a cent per bushel with a contract size of 5,000 bushels.

Use these option quotes to answer this question:

ZZ Industries: Price 34.36

Calls:

Strike Symbol Last Chg Bid Ask Vol Open Int

30.00 ZZBF 4.30 $0.07 4.30 4.40 62 3,429

32.50 ZZBZ 1.87 $0.07 1.82 1.87 236 8,168

35.00 ZZBG 0.01 $0.05 0.00 0.01 3119 38,017

Puts:

Strike

Symbol

Last

Chg

Bid

Ask

Vol

Open Int

30.00 ZZNF 0.01 0.00 0.00 0.01 0 7,258

32.50 ZZNZ 0.01 $0.02 0.00 0.01 562 34,972

35.00 ZZNG 0.60 $0.14 0.63 0.68 2637 19,686

 

You would like to have the right to purchase 200 shares of ZZ Industries stock at a price of $32.50 a share. How much will it cost you to buy options to meet this objective?

 

You own 700 shares of ZZ Industries stock which you purchased for $38.40 a share. You would like to have the right to sell your shares for $35.00 a share. What will be the cost to obtain this right?

 

The 47.50 put on a stock is trading at 1.32 bid and 1.37 ask. To buy one option contract, you must pay ________ at the time the contract is purchased.

Use these option quotes to answer this question:

ZZ Industries: Price 34.36

Calls:

Strike Symbol Last Chg Bid Ask Vol Open Int

30.00 ZZBF 4.30 $0.07 4.30 4.40 62 3,429

32.50 ZZBZ 1.87 $0.07 1.82 1.87 236 8,168

35.00 ZZBG 0.01 $0.05 0.00 0.01 3119 38,017

Puts:

Strike

Symbol

Last

Chg

Bid

Ask

Vol

Open Int

30.00 ZZNF 0.01 0.00 0.00 0.01 0 7,258

32.50 ZZNZ 0.01 $0.02 0.00 0.01 562 34,972

35.00 ZZNG 0.60 $0.14 0.63 0.68 2637 19,686

 

You want to sell four call option contracts on ZZ Industries stock at a strike price of $32.50 a share. How much will you receive in option premiums if you place this order today?

 

You want the right, but not the obligation, to sell 400 shares of ZZ Industries stock at a price of $32.50 a share. How much will it cost you to establish this option position?

 

You purchased four call option contracts with a strike price of $40 and an option premium of $1.25. You closed your contract on the expiration date when the stock was selling for $42.50 a share. What is your total profit or loss on your option position?

 

You purchased three call option contracts with a strike price of $22.50 and an option premium of $0.45. You held the option until the expiration date. On the expiration date, the stock was selling for $21.70 a share. What is the total profit or loss on your option position?

 

You bought six call option contracts with a strike price of $25.00 and a premium of $0.45. At expiration, the stock was selling for $23.75 a share. What is the total profit or loss on your option position if you did not exercise it prior to the expiration date?

 

You bought five call option contracts with a strike price of $47.50 and an option premium of $1.20. At expiration, the stock was selling for $51.30 a share and you exercised your option. What is your total cost basis in the acquired shares?

 

You purchased four call option contracts with a strike price of $25.00 and a premium of $1.25. At expiration, the stock was selling for $26.80 a share. What is the total amount it cost you to acquire your shares?

 

You purchased four put option contracts with a strike price of $35 and a premium of $0.80. What is the total net amount you will receive for your shares if you exercise this contract when the underlying stock is selling for $31.50 a share?

 

You purchased six put option contracts with a strike price of $30 and a premium of $0.90. At expiration, the stock was selling for $26.80 a share. What is the total net amount you received for your shares, assuming that you disposed of your shares on the expiration date?

 

You bought a put option contract with a strike price of $37.50 and a premium of $1.80. At expiration, the stock was selling for $35 a share. What is the net total amount you received for your shares assuming that you disposed of your shares on the expiration date?

 

You purchased 500 shares of SLG, Inc. stock at a price of $43.70 a share. You then purchased put options on your shares with a strike price of $40.00 and an option premium of $0.90. At expiration, the stock was selling for $47.80 a share. You sold your shares on the option expiration date. What is your net profit or loss your transactions related to SLG, Inc. stock?

 

You own 300 shares of stock which you would like to have the right to sell at $40 a share. The 40 call option is quoted at $0.35 bid, $0.40 ask. The 40 put is quoted at $0.45 bid, $0.50 ask. How much will it cost you to obtain the right to sell all of your shares at $40 a share?

 

Alicia owns 500 shares of Danube stock. She thinks the market price will continue to rise but would like to ensure that she can get at least $47.50 a share should she decide to sell her shares. The 47.50 call option is quoted at $1.05 bid, $1.15 ask. The 47.50 put is quoted at $0.80 bid, $0.85 ask. How much will it cost her to ensure that she can sell all of her shares for at least $47.50 each?

 

A 3.5 percent coupon bond is currently quoted at 91.3 and has a face value of $1,000. What is the amount of each semi-annual coupon payment if you own three (3) of these bonds?

 

Jay owns 500 shares of Baker stock. What is the current value of his shares? 

 

A pension fund purchased 15 round lots of Aldridge Inc. stock at the closing price of the day yesterday. What was the cost of that purchase?

 

You own one futures contract on gold that you purchased at a quoted price of 1,448.5. The current price quote is 1405.5. The contract size is 100 ounces and the quotes are expressed in dollars and cents per ounce. What is your current profit or loss on this investment?

 

You want the right, but not the obligation, to sell 300 shares of ZZ Industries stock at a price of $30.00 a share. How much will it cost you to establish this option position?

 

You purchased eight put option contracts with a strike price of $30 and a premium of $1.10. What is the total net amount you will receive for your shares if you exercise this contract when the underlying stock is selling for $26.50 a share?

 

An investment company: 

 

An investment company that will repurchase shares at any time is called a(n) ________ fund.

 

An investment company that issues a fixed number of shares which can only be resold in the open stock market is called a(n) ________ fund.

 

The value of a load mutual fund's assets less its liabilities, divided by the number of shares outstanding is referred to as the fund's:

 

A fee that is charged at the time mutual fund shares are purchased by an investor is called a:

 

A 12b-1 fee is a fee charged by a mutual fund: 

 

The turnover for a mutual fund refers to

 

An open-end fund which invests solely in short-term debt obligations is called a(n) ________ mutual fund.

 

A fund that is basically an index fund that trades like a closed-end fund is called a(n):  

 

Which one of the following describes an investment company that generally has an unrestricted investment strategy and is not accessible to the general public?

 

Which of the following are three key advantages of mutual funds? 

 

Which one of the following statements is correct concerning mutual funds? 

 

Which one of the following statements is correct concerning an open-end mutual fund which charges a front-end load?

 

Which one of the following statements correctly relates to closed-end funds? 

 

Shares in closed-end funds: 

 

A mutual fund is owned by: 

 

Mutual funds are generally created to: 

 

Investment advisory firms generally provide which of the following services to a mutual fund?

I. marketing

II. record keeping

III. investment research

IV. tax payment

 

An investment company will be treated as a "regulated investment company" by the Internal Revenue Service provided that it:

I. invests almost all of its assets in bonds, stocks, and other securities.

II. invests solely in U.S. securities.

III. does not invest more than two percent of its assets in any one security.

IV. passes all its realized investment income through to its shareholders.

 

The income earned by a regulated investment company is: 

 

Today, you are selling shares of an open-end mutual fund and will be charged a CDSC of 3 percent. The price you will receive per share is equal to:

 

Which one of the following costs can a mutual fund shareholder avoid by holding shares for an extended period of time?

 

When the offering price and the NAV are the same, you know that a mutual fund is not charging which one of the following fees?

 

Assume a mutual fund is a pure no-load fund. Which of the following costs should an investor still expect to incur?

I. contingent deferred sales charge

II. management fee

III. trading costs

IV. redemption fee

 

Contingent deferred sales charges: 

 

Mutual fund trading costs: 

 

Which one of the following is not included in the fee table found in a mutual fund prospectus?

 

What are the two best reasons for considering a load fund? 

 

Money market mutual funds do which one of the following? 

 

The net asset value of a money market mutual fund: 

 

Money market mutual funds: 

 

To determine the actual objective of a fund, you should primarily refer to the: 

 

Which type of stock fund focuses on maximizing share price appreciation? 

 

Which type of stock fund focuses primarily on current income? 

 

Small-cap funds: 

 

The primary difference between an international fund and a global fund is the fact that: 

 

Which type of fund should you purchase if you are interested in investing primarily in countries that have relatively new stock markets?

 

A sector fund: 

 

A fund which tracks the S&P 500 would best be classified as which type of fund

 

Which one of the following characteristics best fits an index fund? 

 

You want to purchase shares in a fund and also ensure that your money does not support firms that harm the environment. Which type of fund should you purchase?

 

Which one of the following is the distinguishing characteristic of a municipal bond fund?

 

Which one of the following types of bond funds tends to have the highest level of risk? 

 

Renee wants to invest in a bond fund. She is a very conservative investor with a high marginal tax rate. Which one of the following types of bond funds might be most suited for her situation?

 

Jack has managed to save $1,000 and wants to start investing. The financial markets make him nervous as he has very limited financial resources. Which one of the following types of funds is probably best for Jack at this time?

 

Which one of the following types of funds invests in both stocks and bonds and actively attempts to time the market?

 

Which one of the following types of funds is most apt to invest in preferred stocks? 

 

Besides size, how else does a mutual fund style box classify equity funds? 

 

Letter grades are most frequently assigned to mutual funds based on the fund's: 

 

While reviewing mutual fund reports, Allen noticed that a fund was reported as "closed". What is the primary reason for closing a fund?

 

You recently purchased a fund at a price of $39.97 per share. The NAV at the time of purchase was $40.67. You must have purchased a(n) ________ fund.

 

Which one of the following is a common characteristic of a closed-end fund but not of an open-end fund?

 

If you purchase shares in a closed-end fund at the initial offer price, you should expect to:

 

Which one of the following trading symbols is associated with the ETF on the S&P 500 index?

 

An ETF is best described as: 

 

Which of the following can you do with an ETF that you cannot do with an open-end fund?

I. sell at mid-day prices

II. short sell

III. buy options on them

IV. resell

 

Exchange traded notes were first created to mimic ________ index.

 

ETFs are: 

 

Which one of the following correctly applies to hedge funds? 

 

Which of the following will exempt a hedge fund from registering with the SEC? 

 

A hedge fund may charge a special performance fee which commonly ranges from: 

 

Currently, the term "hedge fund" refers to: 

 

A hedge fund: 

 

The Blue Star Fund has assets with a market value of $10.6 million and liabilities of $607,000. What is the net asset value if there are 185,000 shares outstanding?

 

The Latest Trend Fund has $2,648,900 in assets, and $1,878,400 in liabilities. How many shares are outstanding if the NAV is $10.07?

 

A mutual fund has an NAV of $10.25 with 252,000 shares outstanding. What is the value of the fund's assets if it has $340,500 in liabilities?

 

The Atlas Mutual Fund owns the following stocks:

Stock Shares Stock Price

X 2,600 $48

Y 3,800 $69

Z 1,900 $26

The fund has no liabilities and has 65,000 shares outstanding. What is the NAV?

 

The Market Stability Fund owns the following stocks: 

Stock Shares Price

A 8,790 $49

B 6,700 $39

C 4,200 $55

The fund has no liabilities and has 57,600 shares outstanding. What is the NAV?

 

At the beginning of the year, you invested $5,000 in a no-load mutual fund with a NAV of $25.00. At the end of the year, the fund distributed $1.10 per share in short-term earnings and $3.10 per share in long-term earnings. The end of year NAV was $24.60. What was your annual rate of return on this investment?

 

You invested $9,000 in a mutual fund when the offering price was $31.50 and the NAV was $30.20. This purchase was made one year ago today. Today, the fund distributed a total of $1.55 in long-term gains and $0.85 in short-term gains. The current offering price is $33.42 and the NAV is $32.08. What is your return for the year?

 

One year ago, you purchased 421 shares of a mutual fund when both the offering price and the NAV were $10.80 a share. Today, the NAV is $10.64 after today's distribution of $1.48 per share in short-term gains. There is no long-term gain distribution. What is your rate of return?

 

One year ago, you purchased $8,000 worth of a mutual fund at an offering price of $41.40 a share. Today, the fund distributed $0.20 per share in short-term gains and $1.04 per share in long-term gains. The current offering price is $46.60. The fund has a front-end load of 5 percent and total annual operating expenses of 1.25 percent. What is your rate of return on this investment?

 

The Stone Wall Fund has an offer price of $32.90 and a front-end load of 3.25 percent. What is the net asset value?

 

The European Growth Fund has $820 million in assets and $76,000 in liabilities. There are 30.5 million shares outstanding. The fund charges a 4.4 percent front-end load. What is the offering price?

 

A mutual fund has a current offering price of $56.70. What is the net asset value if the fund charges a 4.5 percent front-end load?

 

The High Growth Technology Fund has an NAV of $51.06 and a 4.4 percent front-end load. What is the offering price?

 

The Stable Utility Fund has an offering price of $54.11 and an NAV of $52.48. What is the front-end load percentage?

 

You want to buy 1,200 shares of a mutual fund that has an NAV of $27.80. The fund charges a 3.75 percent front-end load. How much will you have to spend to make this purchase?

 

You are investing $8,000 in a mutual fund that charges a 4.50 percent front-end load. The offering price is $24.70 a share. What will your investment be worth immediately after your shares are purchased?

 

Alex invested $10,000 in a mutual fund two and one-half years ago when the NAV of the fund was $25. Today, the NAV has risen to $28.30. Since the time of his original investment, Alex has obtained an additional 54.36 shares by reinvesting the fund distributions. The fund charges a contingent deferred sales charge of 6 percent the first year with the charge decreasing by 1 percent each year. How much money will he receive if he redeems his shares today?

 

You invested $4,500 in a mutual fund 38 months ago when the NAV of the fund was $31.80. You have not acquired or sold any shares since that time. Today, the NAV is $30.84. The fund charges a contingent deferred sales charge of 6, 5, 4, 3, 2, 2, and 1 percent if the shares are redeemed within the first 7 years, respectively. How much money will you receive if you redeem your shares today?

 

One year ago, Allison purchased 350 shares of a mutual fund which has a front-end load of 5.25 percent. The NAV at the time of purchase was $30. Today, the NAV is $33. The fund had total annual expenses of 1.65 percent. There were no fund distributions this past year. What is Allison's rate of return for the year?

 

Five months ago, you purchased 200 shares of a mutual fund at an offering price of $54 a share. The fund imposes a front-end load of 4.5 percent and has total annual expenses of 1.08 percent. The NAV of the fund today is $52.40. There were no fund distributions during these five months. What is your holding period return on this investment?

 

Western States Mutual Fund sold $89.5 million of assets during the year and purchased $82 million of new assets. The average daily assets of the fund were $273 million. What is the fund's turnover rate for the year?

 

The Aggressive Eastern Fund sold $167 million of assets during the year and purchased $162 million of new assets. The average daily assets of the fund were $248 million. What is the turnover rate?

 

Matt owns 724.08 shares of a fund which has a current NAV of $41.04. He has owned all of these shares for 3.3 years. The fund charges a contingent deferred sales charge which starts at 5 percent for the first year and declines by 1 percent each year. How much cash will he receive if he redeems all of his shares today?

 

Six years ago, you purchased 210.20 shares of a mutual fund. Since then, you have reinvested your fund dividends and acquired an additional 36.32 shares. The fund currently has an NAV of $38.95. The fund charges a contingent deferred sales charge of 5 percent for the first 2 years after which time the charge declines by 1 percent a year. How much money will you receive if you redeem all of your shares today?

 

You invest $4,300 in a money market fund at the beginning of the year. The fund's assets appreciate by 3.2 percent over the year. How many shares of the fund do you own at the end of the year?

 

One year ago, you invested $7,000 in the no-load Triple A Money Market Fund. You have neither added to this account nor received any funds from this account since that time. The fund earned a 5.2 percent rate of return for the past year. How many shares of this fund do you currently own?

 

The High Yield Money Market Fund returned 6.60 percent for the last year. Currently, you own 8,901.1 shares of this fund. If you invested in this fund one year ago, what was the amount of your original investment?

 

A taxable money market fund has an annual return of 4.62 percent. What is the equivalent aftertax yield if the tax rate is 27 percent?

 

A tax exempt money market fund has an annual return of 3.76 percent. What is your equivalent taxable rate if you are in a 28 percent marginal tax bracket?

 

The Exploratory Fund is a new closed-end fund which just offered its shares to the public. The fund raised $66.5 million and each share sold for $10. The fee for the fund promoter was 5.75 percent of the initial proceeds. What was the value of your initial $22,000 purchase before the shares began trading in the marketplace?

 

A closed-end fund has total assets of $379 million and liabilities of $640,000. There are 36 million shares outstanding. What is the premium or discount if the shares are currently selling for $9.85 each?

 

The Toledo Fund has assets with a market value of $11.5 million and liabilities of $708,000. What is the net asset value if there are 190,000 shares outstanding?

 

At the beginning of the year, you invested $7,500 in a no-load mutual fund with a NAV of $30.00. At the end of the year, the fund distributed $1.05 per share in short-term earnings and $3.00 per share in long-term earnings. The end of year NAV was $24.75. What was your annual rate of return on this investment?

 

A mutual fund has a current offering price of $35.70. What is the net asset value if the fund charges a 3.75 percent front-end load?

 

You invested $7,000 in a mutual fund 28 months ago when the NAV of the fund was $22.30. You have not acquired or sold any shares since that time. Today, the NAV is $21.50. The fund charges a contingent deferred sales charge of 6, 5, 4, 3, 2, 2, and 1 percent if the shares are redeemed within the first 7 years, respectively. How much money will you receive if you redeem your shares today?

 

Five years ago, you purchased 220.80 shares of a mutual fund. Since then, you have reinvested your fund dividends and acquired an additional 35.10 shares. The fund currently has an NAV of $37.60. The fund charges a contingent deferred sales charge of 5 percent for the first 2 years after which time the charge declines by 1 percent a year. How much money will you receive if you redeem all of your shares today?

 

The Emerging Fund is a new closed-end fund which just offered its shares to the public. The fund raised $75 million and each share sold for $20. The fee for the fund promoter was 4.80 percent of the initial proceeds. What was the value of your initial $20,000 purchase before the shares began trading in the marketplace?

 

Suppose you bought 900 shares of stock at an initial price of $44 per share. The stock paid a dividend of $0.42 per share during the following year, and the share price at the end of the year was $39.

 

a. Compute your total dollar return on this investment. (A negative value should be indicated by a minus sign.)

 

b. What is the capital gains yield? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

c. What is the dividend yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

d. What is the total rate of return on the investment? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

The rates of return on Cherry Jalopies, Inc., stock over the last five years were 13 percent, 11 percent, −2 percent, 2 percent, and 15 percent. Over the same period, the returns on Straw Construction Company’s stock were 16 percent, 18 percent, −1 percent, 3 percent, and 10 percent.

 

Calculate the variances and the standard deviations for Cherry and Straw. (Do not round intermediate calculations. Enter your variance as a decimal rounded to 5 decimal places. Enter your standard deviation as a percent rounded to 2 decimal places.)

 

Suppose you purchase 650 shares of stock at $50 per share with an initial cash investment of $17,250. If your broker requires a maintenance margin of 25 percent, at what share price will you be subject to a margin call? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

You have $54,000 and decide to invest on margin. If the initial margin requirement is 50 percent, what is the maximum dollar purchase you can make? (Round your answer to the nearest whole number.)

 

The stock of Flop Industries is trading at $49. You feel the stock price will decline, so you short 250 shares at an initial margin of 80 percent. If the maintenance margin is 30 percent, at what share price will you receive a margin call? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

You buy 400 shares of stock at a price of $92 and an initial margin of 60 percent. If the maintenance margin is 30 percent, at what price will you receive a margin call? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Suppose the call money rate is 6.8 percent, and you pay a spread of 1.9 percent over that. You buy 1,200 shares at $48 per share with an initial margin of 65 percent. One year later, the stock is selling for $56 per share and you close out your position. What is your return assuming no dividends are paid? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

You’ve just opened a margin account with $15,000 at your local brokerage firm. You instruct your broker to purchase 700 shares of Landon Golf stock, which currently sells for $32 per share.

 

a. What is your initial margin? (Enter your answer as a percent rounded to 2 decimal places.)

 

b. Construct the equity account balance sheet for this position.

 

You believe the price of Rose, Inc., stock is going to fall and you’ve decided to sell 1,300 shares short. If the current share price is $33, construct the equity account balance sheet for this trade. Assume the initial margin is 100 percent. (Input all amounts as positive values.)     

 

Suppose you buy stock at a price of $83 per share. Three months later, you sell it for $89. You also received a dividend of $0.38 per share. What is your annualized return on this investment? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

You just sold short 1,150 shares of Wetscope, Inc., a fledgling software firm, at $57 per share. You cover your short when the price hits $47.50 per share one year later. If the company paid $0.61 per share in dividends over this period, what is your rate of return on the investment? Assume an initial margin of 55 percent. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

You found the following stock quote for DRK Enterprises, Inc., at your favorite website. You also found that the stock paid an annual dividend of $.69, which resulted in a dividend yield of 1.5 percent. Assume the company has 83 million shares of stock outstanding and a P/E ratio of 19.

 

What was net income for the most recent four quarters? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

 

You find a stock selling for $91.14 that has a dividend yield of 3.45 percent. What was the last quarterly dividend paid? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

You found the following stock quote for DRK Enterprises, Inc., at your favorite website. You also found that the stock paid an annual dividend of $1.32, which resulted in a dividend yield of 1.70 percent.

 

a. What was the closing price for this stock yesterday? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

b. How many round lots of stock were traded? (Round your answer to the nearest whole round lot.)

 

Use the following corn futures quotes:

 

a. How many of the July contracts are currently open?

 

b. How many of these contracts should you sell if you wish to deliver 140,000 bushels of corn in September?

 

c. If you actually make delivery, how much will you receive? Assume you locked in the settle price. (Do not round intermediate calculations. Round your answer to the nearest whole number.)

 

You purchase 3,500 bonds with a par value of $1,000 for $983 each. The bonds have a coupon rate of 10.7 percent paid semiannually and mature in 10 years. How much will you receive on the next coupon date? How much will you receive when the bonds mature? (Do not round intermediate calculations. Round your answers to the nearest whole number.)

 

Suppose you have $30,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $30 per share. You notice that a put option with a $30 strike is available with a premium of $3.00. Calculate your percentage return on the put option for the six-month holding period if the stock price declines to $27 per share. (A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your 6-month return as a percent rounded to 2 decimal places.)   

 

The World Income Appreciation Fund has current assets with a market value of $11.7 billion, 350 million shares outstanding, and a current market price quotation of $35.08. Calculate the front-end load. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

The Emerging Growth and Equity Fund is a “low-load” fund. The current offer price quotation for this mutual fund is $19.95, and the front-end load is 1.55 percent.

 

a. What is the NAV? (Round your answer to 2 decimal places.)

 

b. If there are 19.7 million shares outstanding, what is the current market value of assets owned by the fund? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

 

An open-end mutual fund has the following stocks:

 

The fund has 69,000 shares and liabilities of $195,000. What is the NAV of the fund? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

A mutual fund sold $56 million of assets during the year and purchased $50 million in assets. If the average daily assets of the fund were $176 million, what was the fund turnover? (Enter your answer as a percent rounded to 2 decimal places.)

 

The Argentina Fund has $430 million in assets and sells at a discount of 6.7 percent to NAV. If the quoted share price for this closed-end fund is $18.48, how many shares are outstanding? (Do not round intermediate calculations. Round your answer to the nearest whole number.)  

 

Suppose you’re evaluating three alternative MMMF investments. The first fund buys a diversified portfolio of municipal securities from across the country and yields 4.3 percent. The second fund buys only taxable, short-term commercial paper and yields 5.9 percent. The third fund specializes in the municipal debt from the state of New Jersey and yields 4 percent. You are a New Jersey resident, your federal tax bracket is 35 percent, and your state tax bracket is 8 percent. (Assume your state taxes do not affect your federal taxable income.)

 

1. Calculate the after-tax yield for each of the alternatives. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

 

2. Which of these three MMMFs offers you the highest after-tax yield?

 

A closed-end fund has total assets of $405 million and liabilities of $220,000. Currently, 22 million shares are outstanding. What is the NAV of the fund? If the shares currently sell for $17.05, what is the premium or discount on the fund? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round the NAV answer to 2 decimal places. Enter the premium or discount as a percent rounded to 2 decimal places.)

 

You purchased 3,200 shares in the New Pacific Growth Fund on January 2, 2016, at an offering price of $47.50 per share. The front-end load for this fund is 4 percent, and the back-end load for redemptions within one year is 2 percent. The underlying assets in this mutual fund appreciate (including reinvested dividends) by 5 percent during 2016, and you sell back your shares at the end of the year. If the operating expense ratio for the New Pacific Growth Fund is 1.83 percent, what is your total return from this investment? (Assume that the operating expense is netted against the fund’s return.) (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

A particular stock has a dividend yield of 1.6 percent. Last year, the stock price fell from $83 to $69. What was the return for the year? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

You’ve just opened a margin account with $29,520 at your local brokerage firm. You instruct your broker to purchase 600 shares of Landon Golf stock, which currently sells for $82 per share. Suppose the call money rate is 7 percent and your broker charges you a spread of 1 percent over this rate. You hold the stock for four months and sell at a price of $90 per share. The company paid a dividend of $0.44 per share the day before you sold your stock.

 

a. What is your total dollar return from this investment? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

b. What is your effective annual rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

You find a stock selling for $91.14 that has a dividend yield of 2.6 percent and a P/E ratio of 14.0. What is the earnings per share (EPS) for the company? (Round your answer to 2 decimal places.)

 

A sector fund specializing in commercial bank stocks had average daily assets of $4.7 billion during the year. Suppose the annual operating expense ratio for the mutual fund is 1.25 percent, and the management fee is 1.00 percent. How much money did the fund’s management earn during the year? If the fund doesn’t charge any 12b-1 fees, how much were miscellaneous and administrative expenses during the year? (Do not round intermediate calculations. Enter your answer in dollars not in millions, e.g., 1,234,567.)  

 

Carson Corporation stock sells for $44 per share, and you’ve decided to purchase as many shares as you possibly can. You have $52,000 available to invest. What is the maximum number of shares you can buy if the initial margin is 70 percent? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

 

Suppose you hold a particular investment for 6 months. You calculate that your holding period return is 5 percent. What is your annualized return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

The contract size for platinum futures is 50 troy ounces. Suppose you need 200 troy ounces of platinum and the current futures price is $1,130 per ounce. How many contracts do you need to purchase? How much will you pay for your platinum? What is your dollar profit if platinum sells for $1,170 a troy ounce when the futures contract expires? What if the price is $1,075 at expiration? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole number.)

 

You invested $95,000 in a mutual fund at the beginning of the year when the NAV was $81.18. At the end of the year, the fund paid $0.41 in short-term distributions and $0.58 in long-term distributions. If the NAV of the fund at the end of the year was $83.15, what was your return for the year? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)   

 

You purchase 800 shares of 2nd Chance Co. stock on margin at a price of $42. Your broker requires you to deposit $17,000.

 

a. What is your margin loan amount? (Do not round intermediate calculations.)

 

b. What is the initial margin requirement? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Suppose you take out a margin loan for $44,000. The rate you pay is an effective rate of 9.2 percent. If you repay the loan in six months, how much interest will you pay? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

You purchase 9 call option contracts with a strike price of $65 and a premium of $1.85. Assume the stock price at expiration is $72.46.

 

a. What is your dollar profit? (Do not round intermediate calculations.)

 

b. What is your dollar profit if the stock price is $58.41? (A negative value should be indicated by a minus sign. Do not round intermediate calculations.)

 

If the stock price is $, the call is 

 

An open-end mutual fund has the following stocks:

 

The fund has 52,000 shares and liabilities of $132,000. Assume the fund is sold with a front-end load of 4.5 percent. What is the offering price of the fund? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

You purchase 450 shares of 2nd Chance Co. stock on margin at a price of $60. Your broker requires you to deposit $17,000.

 

a. Suppose you sell the stock at a price of $68. What is your return? What would your return have been had you purchased the stock without margin? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

 

b. What is your return if the stock price is $59 when you sell the stock? What would your return have been had you purchased the stock without margin? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 

 

Suppose you purchase 900 shares of stock at $74 per share with an initial cash investment of $33,300. The call money rate is 5 percent and you are charged a 1.5 percent premium over this rate. Ignore dividends.

 

a. Calculate your return on investment one year later if the share price is $82. Suppose instead you had simply purchased $33,300 of stock with no margin. What would your rate of return have been now? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

 

b. Calculate your return on investment one year later if the share price is $74. Suppose instead you had simply purchased $33,300 of stock with no margin. What would your rate of return have been now? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

 

c. Calculate your return on investment one year later if the share price is $58. Suppose instead you had simply purchased $33,300 of stock with no margin. What would your rate of return have been now? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

 

Use the following corn futures quotes:

 

Suppose you sell 19 of the May corn futures at the high price of the day. You close your position later when the price is 464.500. Ignoring commission, what is your dollar profit on this transaction? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

An open-end mutual fund has the following stocks:

 

If there are 62,000 shares of the mutual fund, what is the NAV? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

The World Income Appreciation Fund has current assets with a market value of $12.2 billion and has 290 million shares outstanding. What is the net asset value (NAV) for this mutual fund? (Round your answer to 2 decimal places.)

 

You short sold 550 shares of stock at a price of $34 and an initial margin of 65 percent. If the maintenance margin is 35 percent, at what share price will you receive a margin call? What is your account equity at this stock price? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 

The Aqua Liquid Assets Money Market Mutual Fund has a NAV of $1 per share. During the year, the assets held by this fund appreciated by 0.4 percent. If you had invested $30,000 in this fund at the start of the year, how many shares would you own at the end of the year? What will the NAV of this fund be at the end of the year?

 

Use the following corn futures quotes:  

 

Suppose you buy 27 of the September corn futures contracts at the last price of the day. One month from now, the futures price of this contract is 464.125, and you close out your position. Calculate your dollar profit on this investment. (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

You purchased a stock at the end of the prior year at a price of $99. At the end of this year, the stock pays a dividend of $2.00 and you sell the stock for $100. What is your return for the year? Now suppose that dividends are taxed at 15 percent and long-term capital gains (over 11 months) are taxed at 30 percent. What is your after-tax return for the year? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

 

The absolute minimum initial margin requirement is set by the:
 
 
An agreement that grants the owner the right, but not the obligation, to buy or sell a specific asset at a specified price during a specified time period is called a(n) ________ contract.
 
 
The annual interest payment divided by the current price of a bond is called the:
 
 
The average compound return earned per year over a multi-year period is called the:
 
 
Currently, the term "hedge fund" refers to:
 
 
The dividend yield is defined as the annual dividend expressed as a percentage of the
 
 
The DJIA is an index of the stock prices of ________ firms.
 
 
A financial asset that represents a claim on another financial asset is classified as a(n) ________ asset.
 
 
A firm that specializes in arranging financing for companies is called a(n):
 
 
A fund that is basically an index fund that trades like a closed-end fund is called a(n):
 
 
he minimum equity that must be maintained at all times in a margin account is called the:
 
 
Hi-Tek Shoes is a private firm that has decided to issue shares of stock to the general public. This stock issue will be referred to as a(n):
 
 
If you benefit when a security decreases in value, you have a
 
 
A mutual fund is created by which one of the following parties?
 
 
The net asset value of a money market mutual fund:
 
 
An open-end fund which invests solely in short-term debt obligations is called a(n) ________ mutual fund.
 
 
An order to buy shares of stock at a stated price or less is called a________ order.
 
 
Preferred stock:
 
 
Stacey purchased 300 shares of Coulter Industries stock and held it for 3 months before reselling it. What is the value of "m" when computing the annualized return on this investment?
 
 
When the offering price and the NAV are the same, you know that a mutual fund is not charging which one of the following fees?
 
 
Which of the following will exempt a hedge fund from registering with the SEC?
 
 
Which one of the following had the highest risk premium for the period 1926-2018?
 
 
Which one of the following is generally true concerning securities held in street name?
 
 
Which one of the following is the primary flaw of a price-weighted index?
 
 
Which one of the following statements is correct?
 
 
Which one of the following trading symbols is associated with the ETF that is based on the S&P 500 index?
 
 
Which one of the following transactions occurs in the primary market?