Question
4. Investor X short-sells 350 shares of XYZ Telecom., now selling for $60 per share. What is his maximum possible loss? * a. $60 b.
4. Investor X short-sells 350 shares of XYZ Telecom., now selling for $60 per share. What is his maximum possible loss? *
a. $60
b. $350
c. $21,000
d. Unlimited
e. None of the above
6. You are bullish on TLP stocks, you have purchased on margin 520 shares for $36 per share. The initial margin requirement is 55%. Assume that the stock pays no dividend, what is your rate of return if you sell the stock after 1 year at $48 per share? *
4. Investor X short-sells 350 shares of XYZ Telecom., now selling for $60 per share. What is his maximum possible loss? *
a. $60
b. $350
c. $21,000
d. Unlimited
e. None of the above
6. You are bullish on TLP stocks, you have purchased on margin 520 shares for $36 per share. The initial margin requirement is 55%. Assume that the stock pays no dividend, what is your rate of return if you sell the stock after 1 year at $48 per share? *
a. 35.2%
b. 45.4%
c. 60.6%
d. 55.0%
e. None of the above
7. An investor short sells 350 shares of TLC Telecom that are currently selling for $28 per share. The initial margin and the maintenance margin required by the broker are 50% and 30% respectively. At what stock price will he get a margin call? Assuming that he earns no interest on the funds in his margin account, and the firm does not pay any dividends. *
a. $28.85
b. $31.71
c. $36.50
d. $34.25
e. None of the above
8. You neighbor buys $21,240 worth of Apple stocks currently selling at $118 per share. The initial margin is equal to 45% and the maintenance margin is equal to 35%. The rate on the margin loan is 6%. After 1 year, the stock pays a $0.75 per share dividend and is sold for $134 per share. What was your neighbors rate of return? *
a. 17.5%
b. 22.81%
c. 24.21%
d. 46.43%
e. None of the above
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