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can you explain why highlighted are correct 6. An investor buys $16,000 worth of a stock priced at $20 per share using 60% initial margin.

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6. An investor buys $16,000 worth of a stock priced at $20 per share using 60% initial margin. The broker charges 8% on the margin loan and requires a 35% maintenance margin. The stock pays a $.50-per-share dividend in 1 year, and then the stock is sold at $25 per share. What was the investor's rate of return? 7. An investor in a 72% tax bracket is trying to decide whether to invest in a municipal bond or a corporate bond. She looks up municipal bond yields (rm) but wishes to calculate the taxable equivalent yield r. The formula she should use is given by A. rIm(128%) B. r=rm/(172%) C. r=rm(172%) D. r=rm/(128%) 8. Three stocks have share prices of $12,$75, and $30 with total market values of $400 million, $350 million, and $150 million, respectively. If you were to construct a price-weighted index of the three stocks with divisor =0.3, what would be the index value? A. 390 (B) 39 C. 43 D. 430 E. None of the above

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