$9)$ How much will be invested in the Municipal bonds?

a$)$ $$800,000$

b$)$ $$1,120,000$

c$)$ $$880,000$

d$)$ $$560,000$

e$)$ $$780,000$

$$ Now it is May $1,2022,$ the price of Eye City stock dropped to $$24.$ Tom is super

excited! He said to his broker $$I told you; this is going to be a penny stock in no time, and I am

going to be rich!!$$ His broker did not agree to that and advised him to cover his position and get

out of it before the price bounces again. But he didn$$t listen.

$10)$ If the maintenance margin on short$-$selling transactions is $30\%,$ how far can the EC price

decline before triggering a margin call?

a$)$ Any Price declines trigger a margin call

b$)$ Price declines don$$t trigger a margin call

c$)$ The price must decline to $$22\mathrm{.}3$ to trigger a margin call

d$)$ The price must decline by $30\%$ to trigger a margin call

e$)$ The price must decline to be $$2$ to trigger a margin call

$11)$ How far could EC stock price rise before Tom receives a margin call?

a$)$ Price increases don$$t trigger a margin call.

b$)$ The price that would trigger a margin call is $ $46\mathrm{.}67.$

c$)$ The price that would trigger a margin call is $ $27\mathrm{.}7.$

d$)$ The price that would trigger a margin call is $ $32\mathrm{.}3.$

e$)$ Any increase in the price would trigger a margin call.

$$ Now, it is Dec $2022,$ The municipal bond is now redeemed. However, the last few months have been

like a nightmare for Tom. EC stock price has been consistently rising. The price hits $$48$ and Tom

just received a margin call, so he decided to use the proceeds from his other investment in the

money market to cover his position at the current price.

$12)$ How much money did he earn from his investment in Texas state bonds, assuming his income tax

rate is $30\%?$

a$)$ $$54,600$

b$)$ $$38,220$

c$)$ $$818,220$

d$)$ $$834,600$

e$)$ $$39,200$

$13)$ How much more money did he need to deposit in his account to cover his short$-$selling position

and get out of this investment experience? $$assuming no fees or dividends needed to be paid$$

a$)$ $$1,920,000$

b$)$ $$240,000$

c$)$ $$1,360,000$

d$)$ $$1,680,00$

e$)$ $$260,000$

$14)$ How much money does Tom have now in total?

a$)$ $$100,000$

b$)$ $$220,000$

c$)$ $$780,500$

d$)$ $$140,000$

e$)$ $$594,600$

$$ Now, it is early $2023.$ Tom is looking back at his investment experience and is trying to learn

his lessons! But this time, he decided that the days of picking single stocks are over! And he

became too busy to have such an active trading style. This time, Tom wants to try investing his

money in a fund and he has a total of $ $1000,000$ to invest after he convinced his wife to invest

part of her savings with him. Currently, Tom is considering two alternatives:

$$ alternative A: Bloom open$-$end fund with a net asset value of $$15$ per share and a front$-$ end load

of $5\%.$

$$ alternative B: TWE closed$-$end fund with an offering price of $$14$ per share and it is selling at

a discount.

$15)$ What is the offering price of the Bloom fund?

a$)$ $$15\mathrm{.}79$

b$)$ $$11\mathrm{.}76$

c$)$ $$16\mathrm{.}25$

d$)$ $$17\mathrm{.}2$

e$)$ $$14\mathrm{.}25$

$16)$ Tom decided to go with the fund that has a lower current offering price. Which fund would he

choose?

a$)$ Bloom

b$)$ TWE

$$ One year later, now it is Dec $31,2023$: the net asset value of the fund that he chose

is

$$16.$ The fund is now selling at a premium of $9\%.$ And the fund paid year$-$end distributions of income

and capital gains of $$1\mathrm{.}40.$

$17)$ If Tom decided to liquidate his investment in this fund now, what would be his rate of return?

a$)24\mathrm{.}28\%$

b$)14\mathrm{.}28\%$

c$)9\mathrm{.}00\%$

d$)34\mathrm{.}57\%$

e$)11\mathrm{.}4\%$

$18)$ About how much will he and his wife have in total after he does so$?$before paying their taxes$$

a$)$ $$1000,000$

b$)$ $$1,345,714$

c$)$ $$654,300$

d$)$ $$242,800$

e$)$ $$757,200$

$$ In $2024$ Ron McInish, the oldest son of Tom, decided to invest in the same fund his dad chose but

he only had $$300,000.$ He started his investment at the beginning of $2024,$ and he kept investing in

it till Jan $2027.$

$$ Now it is end of year $2027,$ This morning, Ron was reviewing his investment statements, he showed

the following information to his dad and asked him to help with some calculations. $($Please ignore

any fund expenses info. in solving this question$)$

Year

Beginning balance

Ending balance

Dividends

$2024$

$2025$

$2026$

$2027$

No$.$ Shares

$20,000$

$20,625$

$21,525$

$22,325$

Share price

$15$

$16$

$13\mathrm{.}75$

$17$

No$.$ Shares

$20,000$

$20,625$

$21,525$

$22,325$

Share price

$16$

$13\mathrm{.}75$

$17$

$18$

per share $0\mathrm{.}50$

$0\mathrm{.}60$

$0\mathrm{.}632$

$0\mathrm{.}80$

$($please notice that the dividends received at the end of each year have been used to purchase new

shares at the beginning of the following year$)$

$19)$ what is the HPR for Ron in $2024?$

a$)6\mathrm{.}67\%$

b$)10\%$

c$)6\mathrm{.}25\%$

d$)8\mathrm{.}9\%$

$20)$ What is the HPR of Ron during his entire investment horizon $2024-$end of $2027($Please notice

that Ron has been reinvesting his entire proceeds from dividends during years $2015,2016,$ and $2017$

in the fund once they are received$)$