FINA-4466 Fall 2019 Quiz 2 Name: A#: Multiple choice questions 1. Assume you purchased 200 shares of common stock at $70 per share. The initial margin is 40%. Your investment was A. $7,000 B. $5,600 C. $14,000 D. $8,400 2. If the annual real rate of interest is 5% and the expected inflation rate is 4%, the nominal rate of interest wow be approximately according to Fisher equation. A. 1% B. 9% C. 20% D. 5% 3. An investor purchased a bond 45 days ago for $985. He received $15 in interest and sold the bond for $ What is the holding period return on his investment? A. 2.04% B. 1.52% C. 1.02% D. 8.23% 4. The price of a 90 days 1,000 face value treasury bill is $996, what is the effective annual rate? A. 2.410% B. 2.468% C. 2.400% D. 2.494% 5. Which of the following orders instructs the broker to sell at or below a specified price? A. Limit-loss order B. Limit-buy order C. Stop-buy order D. Stop-sell order True or false questions 1. Geometric average provides an more accurate measure of the expected return. 2 If the compounding period is less than 1 year, the effective annual rate is greater than the percentage return. Under the 50% initial margin requirement, the maximum amount you could borrow from you 3. is $50,000, if you would like to invest $100,000 of your own money. Bond is typically traded in over-the-counter market. Increasing observation frequency does not improve the accuracy of return mean estimates