1- You purchased 200 shares of ABC common stock on margin at $50 per share. Assume the initial margin is 50% and the maintenance margin is 30%. You will get a margin call if the stock drops below ________. (Assume the stock pays no dividends, and ignore interest on the margin loan.)Show your work

A.

$26.55

B.

$35.71

C.

$28.95

D.

$30.77

2- An investor puts up $5,000 but borrows an equal amount of money from his broker to double the amount invested to $10,000. The broker charges 7% on the loan. The stock was originally purchased at $25 per share, and in 1 year the investor sells the stock for $28. The investor's rate of return was ____.Show your work

A.

17%

B.

12%

C.

14%

D.

19%

3- You sell short 300 shares of Microsoft that are currently selling at $30 per share. You post the 50% margin required on the short sale. If you earn no interest on the funds in your margin account, what will be your rate of return after 1 year if Microsoft is selling at $27? (Ignore any dividends.)Show your work

A.

10%

B.

20%

C.

6.67%

D.

15%

4- Consider a no-load mutual fund with $200 million in assets and 10 million shares at the start of the year and with $250 million in assets and 11 million shares at the end of the year. During the year investors have received income distributions of $2 per share and capital gain distributions of $.25 per share. What is the rate of return on the fund?Show your work

A.

13.65%

B.

23.65%

C.

24.90%

D.

The answer cannot be determined from the information given.

5- The duration of a par value bond with a coupon rate of 8% and a remaining time to maturity of 5 years is(requires calculations)

A. 5 years.

B. 5.4 years.

C. 4.17 years.

D. 4.31 years.

E. none of the above.

6- Holding other factors constant, which one of the following bonds has the smallest price volatility?

A. 5-year, 0% coupon bond

B. 5-year, 12% coupon bond

C. 5 year, 14% coupon bond

D. 5-year, 10% coupon bond

E. Cannot tell from the information given