Can you help answer questions 1,2,3, and 9? Thank you.

FINN 3222 - Investments Dr. Judson Russell Spring 2104 Quiz 1 Name _______________________ Complete the following questions/problems from Chapters 1-3 and our class discussion. Show all of your work involved to solve problems. Use the following information for problems 1-3. You have been asked to create a small index of stocks using ABC, DEF, GHI, and JKL. Your manager asks you to prepare a price-weighted and a market-weighted index for comparison purposes. Stock ABC DEF GHI JKL Price, t=0 $30.12 $12.45 $9.52 $58.19 Price, t=1 $29.78 $12.39 $9.84 $52.82 Shares (million) 89 1,287 8,367 124 1. Calculate the percentage change in value from yesterday (t=0) to today (t=1) using a Price-Weighted Index. SHOW YOUR WORK. 2. Calculate the percentage change in value from yesterday (t=0) to today (t=1) using a Market-Weighted Index. SHOW YOUR WORK. 3. Suppose that after the market closes on t=1, JKL does a 2-for-1 (2:1) stock split. Using the Price-Weighted Index approach, calculate the new divisor. SHOW YOUR WORK. 4. Assets used to produce goods and services are known as ____________. 5. ____________________ is the risk of breakdown in the financial system, particularly due to spillover effects from one market into others. 6. The right to sell an asset at a specified exercise price on or before a specified expiration date is a ___________________. 7. What type of trading order might you give to your broker if you want to buy shares of Intel to diversify your portfolio when you believe the share price is approximately at the \"fair\" value, and you want the trade done quickly and cheaply? 8. _________________ is the use of computer programs to make rapid trading decisions. 9. Suppose an investor initially buys 200 shares of stock at $75 per share with $7,500 of her money and $7,500 borrowed on margin. If the stock pays no dividend and without considering the interest on margin, at what stock price will the investor receive a margin call if maintenance margin is 30%. SHOW YOUR WORK 10. Your aunt is telling you about her recent investment returns from buying local stocks. Her most recent annual returns are 10%, 14%, -9%, 32%, and 16%. She asks you to help her understand her average return over this period. What are the arithmetic and geometric returns over the period? SHOW YOUR WORK Formulas: Geometric = (((1+Ri))^(1))-1 Arthimetic = (Ri) = E(r) Margin = ((Price x shares) - borrowed)/ (Price x shares)