1. You have $450 in your account. Suppose you purchase 10 shares of JPM on margin at $60 per share. Your initial margin right after the purchase of JPM shares is: A. 65% B. 70% C. 75% D. 80% 60(10)=600 2. Based on previous question, suppose that after a month the price of JPM is $50. What is the new margin? Assume no interest rate expenses. A. 65% B. 70% C. 75% D. 80% 3. Matt is planning to invest in T-Bills and the Vanguard S\&P 500 index fund. The T-Bill rate is 5%, and the Vanguard fund exhibits an expected return and standard deviation of 15% and 25%, respectively. Assume Matt's risk aversion is 5 . According to the asset allocation model of his optimal complete portfolio should be invested in the Vanguard fund. A. 22% (B.) 32% C. 42% D. 52% 4. Suppose a security has an expected return of 12%. If the risk-free rate is 5%, the market premium is 10% and the security beta is 0.8. What is the alpha return under CAPM? A. 1.0% B. 0.5% C. +0.5% D. +1.0% 5. From the previous question, what position you should take in the market to exploit such an anomaly? A. Short position B. Long position C. Long-short position D. No position