1.

2. Jerri Kingston bought 100 shares of stock at $88.09 per share, using an initial margin of 57%. Given a maintenance margin of 31%, how far does the stock have to drop before Jerri faces a margin call? (Assume that there are no other securities in the margin account.)

3. An investor believes that the U.S. dollar will rise in value relative to the Japanese yen. The same investor is considering two investments with identical risk and return characteristics: One is a Japanese yen investment and the other is a U.S. dollar investment. Should the investor purchase the Japanese yen investment?

A. No. If the value of the dollar goes up, then the investor will receive more dollars for the yen received from the sale of the investment. Therefore, the investor should purchase the U.S. dollar investment.

B. Yes. If the value of the dollar goes up, then the investor will receive fewer dollars for the yen received from the sale of the investment. Therefore, the investor should purchase the yen investment.

C. Yes. If the value of the dollar goes up, then the investor will receive more dollars for the yen received from the sale of the investment. Therefore, the investor should purchase the yen investment.

D. No. If the value of the dollar goes up, then the investor will receive fewer dollars for the yen received from the sale of the investment. Therefore, the investor should purchase the U.S. dollar investment.

4. Assume that an investor buys 100 shares of stock at $35 per share, putting up a 66% margin.

a. What is the debit balance in this transaction?

b. How much equity funds must the investor provide to make this margin transaction?

c. If the stock rises to $51 per share, what is the investor's new margin position?

5. Erin McQueen purchased 90 shares of BMW, a German stock traded on the Frankfurt Exchange, for euro 64.4(euros) per share exactly one year ago, when the exchange rate was

0.66 euro /US$. Today the stock is trading at euro 70.9 per share, and the exchange rate is 0.76 euro/US$. (Enter all losses as negative numbers.)

a. Did the euro depreciate or appreciate relative to the US$ during the past year? Explain.

b. How much in US$ did Erin pay for her 90 shares of BMW when she purchased them a year ago?

c. For how much in US$ can Erin sell her BMW shares today?

d. Ignoring brokerage fees and taxes, how much profit (or loss) in US$ will Erin realize on her BMW stock if she sells it today?

6. The current exchange rate between the U.S. dollar and the Japanese yen is 120 (yen/$). That is, 1 dollar can buy 120 yen. How many dollars would you get for 1,100 Japanese yen?

7. Bellamy purchased 400 shares of Writeline Communications stock at $55.96 per share using the prevailing minimum initial margin requirement of 52%. She held the stock for exactly 4 months and sold it without any brokerage costs at the end of that period. During the 4 month holding period, the stock paid $1.59 per share in cash dividends. Marlene was charged 8.4% annual interest on the margin loan. The minimum maintenance margin was 25%.

a. Calculate the initial value of the transaction, the debit balance, and the equity position on Marlene's transaction.

b. For each of the following share prices, calculate the actual margin percentage, and indicate whether Marlene's margin account would have excess equity, would be restricted, or would be subject to a margin call: (1) $44.37, (2) $71.55, and (3) $34.47.

c. Calculate the dollar amount of (1) dividends received and (2) interest paid on the margin loan during the 4 month holding period.

d. Use each of the following sale prices at the end of the 4 month holding period to calculate Marlene's annualized rate of return on the Writeline Communications stock transaction: (1) $50.43, (2) $60.27, and (3) $70.72.

8. An investor recently sold some stock in a European company that was worth 29, 000 euros. The US$/euro exchange rate is currently 1.335, meaning that 1 euro buys 1.335 dollars. How many U.S. dollars will the investor receive?

9. An investor short sells 100 shares of a stock for $23 per share. The initial margin is 49%. How much equity will be initially required in the account to complete this transaction? In other words, what is the initial margin deposit?

10. Assume that an investor buys 100 shares of stock at $47 per share, putting up a 63% margin.

a. What is the debit balance in this transaction?

b. How much equity capital must the investor provide to make this margin transaction?

Calculate the profit or loss per share realized on each of the following short sale transactions Stock Sold Short at Price/Share $74.25 $30.16 $18.83 $26.83 $54.14 Stock Purchased to Cover Short at Price/Share $83.65 $22.78 $14.78 $32.37 $44.69 Transaction (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Transaction A produced a | of $| |. (Round to the nearest cent and enter a loss as a negative number) Transaction B produced a | of $| |. (Round to the nearest cent and enter a loss as a negative number) Transaction C produced a | of $1 . (Round to the nearest cent and enter a loss as a negative number.) Transaction D produced a | of $1 . (Round to the nearest cent and enter a loss as a negative number.) Transaction E produced a | of $| |. (Round to the nearest cent and enter a loss as a negative number)