1. An investor trades on margin. He borrows at 7% APR interest cost, and he uses full amount of initial margin at 40%. Assuming that there are 365 days in a year. He initially purchases at $70 and after 180 days, sells at $68. What is the leverage factor?

options:

A. 1.4

B. 2.6

C. 3.7

D. 4.4

2. In Hong Kong, only stocks on a designated list can be shorted, while other stocks cannot be shorted. If a stock is added to the designated list (becomes shortable), we believe that some informed traders who were originally excluded from trading will enter the market and trade. If this story is valid, which of the followng statements are true?

options:

A. The stock 's cumulative return is positive

B. the spread is expected to narrow

C. the depth is expected to be thicker

D. none of the above