1. The return on a risky portfolio is 20%. The risk-free rate, as well as the investor's borrowing rate, is 10, The standard deviation of return on the risky portfolio is 20, " the standard deviation on the complete portfolio is 29%, the expected return on the complete portfolio is A, 6% B, 16.25% . 22.5% D, None of the above 2. An investor can purchase either a municipal or a corporate bond that pay rates of return of 6% and 8% respectively Under what tax regime would the investor be indifferent between the two bonds? A)10% B)20% C)40% D)None of the above 3. You are an investment manager. Your client has come to you for long-term investment advice and this client uses the past 80 year Sharpe ratio as measure of investment success. Which of the following would be your top recommendation? (a) US Long-term Treasury (b) US Large Stocks (c) US Small Stocks (d) World Market Government Bonds 4. You short 20 shares of MSFT at SSO and the broker requires 30% m argin, and has a 20% maintenance margin. At what price will you receive a margin call? A)S52.66 B)$53.45 C)$54.17 D) None of the above 5. Consider a limit order book with the following orders Ask: 500 Shares at $101.5; 400 Shares at $102 Bid: 300 Shares at $101; 250 Shares at $100 Suppose a Market Sell order arrives for 350 shares. What is the spread in the book after execution of the marke sell order? A. $O.5 B. $1 C. $1.5 D. $2 5. You short-sell 1000 shares of Hilbertson Trading Co., now selling for $100 per share. The Hilbertson share xpected return of 10% and standard deviation of 25%, what is your maximum possible loss? 10000 B. $110,000 C. $250,000 D. Unlimited You purchased 200 shares of ABC common stock on margin at $50 per share. Assume the initi margin is 30%. You will get a margin call if the stock drops below uirement is 60% and the maintenance 1. The return on a risky portfolio is 20%. The risk-free rate, as well as the investor's borrowing rate, is 10, The standard deviation of return on the risky portfolio is 20, " the standard deviation on the complete portfolio is 29%, the expected return on the complete portfolio is A, 6% B, 16.25% . 22.5% D, None of the above 2. An investor can purchase either a municipal or a corporate bond that pay rates of return of 6% and 8% respectively Under what tax regime would the investor be indifferent between the two bonds? A)10% B)20% C)40% D)None of the above 3. You are an investment manager. Your client has come to you for long-term investment advice and this client uses the past 80 year Sharpe ratio as measure of investment success. Which of the following would be your top recommendation? (a) US Long-term Treasury (b) US Large Stocks (c) US Small Stocks (d) World Market Government Bonds 4. You short 20 shares of MSFT at SSO and the broker requires 30% m argin, and has a 20% maintenance margin. At what price will you receive a margin call? A)S52.66 B)$53.45 C)$54.17 D) None of the above 5. Consider a limit order book with the following orders Ask: 500 Shares at $101.5; 400 Shares at $102 Bid: 300 Shares at $101; 250 Shares at $100 Suppose a Market Sell order arrives for 350 shares. What is the spread in the book after execution of the marke sell order? A. $O.5 B. $1 C. $1.5 D. $2 5. You short-sell 1000 shares of Hilbertson Trading Co., now selling for $100 per share. The Hilbertson share xpected return of 10% and standard deviation of 25%, what is your maximum possible loss? 10000 B. $110,000 C. $250,000 D. Unlimited You purchased 200 shares of ABC common stock on margin at $50 per share. Assume the initi margin is 30%. You will get a margin call if the stock drops below uirement is 60% and the maintenance
