Can you answer question #3 and #5? Thank you!

I attached the homework.

FIL 242:01 INVESTMENTS HOMEWORK ASSIGNMENT #2 Due Sunday MAY 29, 6:00 PM This assignment covers topics discussed in Chapters 3 and 4. Here a few rules for submission. If you don't observe these rules, I will take 10 points off your score. Please submit your assignment in the \"assignment\" folder on ReggieNet using the \"attachment only\" format. When you submit your assignment, Label your document with your full name and the assignment #. In other words: firstname.lastname.assignment#2. This tremendously helps me save your assignment for further grading Please indicate your name clearly on the front page of your answer sheet. Each answer must appear directly below each question. For instance, answer 1 must appear right below question 1. Or answer 4 a. must appear right below question 4 a. etc... Please bold your answers Please don't invert the order of the questions. Question #1: (10 points) Below are the current price quotes on stock XYZ Best bid = $9.92 Best offer = $10.01 a You instruct your broker to buy the stock at a limit order of $9.90. Would your order be executed right now? Why or why not? (5 points) b What would need to happen for your buy order to be executed if you changed it now to $9.95? (5 points) Question #2: (25 points) Dee Trader opens a brokerage account to trade stocks, and purchases 300 shares of Internet Dreams stock at $40/share. She borrows $4,000 from her broker to help pay for the purchase. The interest on the loan paid to the broker is 8% per year payable at the end of the year. a. What is the margin (in %) in Dee's account when she first purchases the stock? (5 points) 1 66.6% b. If the share price falls to $30/share at the end of the year, what is the remaining % margin in her account? If the maintenance margin requirement is 30%, will she receive a margin call? (5 points) 52% and she will not receive a margin call c. If the price of the stock per share rises to $45 at the end of the year, what is the % profit made by Dee Trader on her investment? (5 points) 14.75% d. Redo c) calculations but this time, assume that the interest on the loan paid to the broker is only 3% per year, payable at the end of the year. (5 points) 17.25% e. Assume now that Dee Trader decides not to buy on margin and only invests her own money in the Internet Dreams stock. What would be the % profit (return) made by her if the price of stock rises to $45 dollar? (5 points) 12.5% NOTE: To calculate the % profit (return) made by Dee Trader on her investment: % profit = (current market value of stock investment - loan repaid - initial investment) / Dee's initial investment OR: % profit = Dee Trader's current net equity/ her original equity Question #3: (25 points) You open a margin account at Chas Pigeon, a discount broker. You subsequently short sell 10 shares of exciting.com at $286/per share. Your broker lends you the shares of stock and charges you an annual interest cost of 5% of the proceeds of the short sale. One year later, Exciting.com has declined to $200 per share, at which point you buy back the stock and return it to your broker. a. The margin requirement is 50%. Calculate your dollar loss or gain on the position, taking into account the interest paid to your broker. b. Calculate the percent return on your investment. 2 QUESTION #5: (25 points) At the beginning of the year, the composition of the Blackrock mutual fund was as follows: Stocks Number of Shares Price per share X 20 million $12 Y 30 million $31 Z 25 million $22 W 15 million $20 Invested in a) The fund has issued 100 million of its own shares to investors. The fund's liabilities are the management fees paid to the portfolio manager ($1 million) and research costs ($10 million). What was the net asset value of the fund at the beginning of the year? (12.5 points) b) Today, the market prices of stocks X, Y, Z and W, are $15, $25, $25 and $18 respectively (Assume the number of shares of each stock owned by Blackrock remains unchanged, and that the fund liabilities remain unchanged as well). In addition, the fund just made a dividend distribution of $1 per share to investors. What is the new net asset value of the fund today? What is the rate of return of the fund between the beginning of the year and today? (12.5 points) Question #6: (15 points) Corporate Fund started the year with a net asset value of $12.50. By year end, its NAV equaled $12.10. The fund paid year-end distributions of income and capital gains of $1.50. What was the rate of return to an investor in the fund? 8.8% 3 4