market and briefly discuss the characteristics of a good market.\ Define liquidity and discuss the factors that contribute to it. Give examples of a liquid asset and an illiquid asset, and discuss why they are considered liquid and illiquid.\ Define the primary and secondary market for securities and discuss how they differ. Discuss why the primary market is dependent on the secondary market.\ Briefly define each of the following terms and give an example.\ a) Market order\ b) Limit order\ c) Short sale\ d) Stop loss order\ The initial margin requirement is

60%

. You have

$40,000

to invest in a stock selling for

$80

a share. Ignoring taxes and commissions, show in detail the impact on your rate of return if the stock rises to

$100

a share and if it declines to

$40

a share assuming; (a) you pay cash for the stock, and (b) you buy it using maximum leverage\ Lauren has a margin account and deposits

$50,000

. Assuming the prevailing margin requirement is

40%

, commissions are ignored, and The Gentry Shoe Corporation is selling at

$35

per share:\ a) How many shares can Lauren purchase using the maximum allowable margin?\ b) What is Lauren's profit (loss) if the price of Gentry's stock\ i. Rises to

$45

?\ ii. Falls to

$25

\ c) If the maintenance margin is

30%

, to what price can Gentry Shoe fall before Lauren will receive a margin call?\ Suppose you buy a round lot of Maginn Industries stock on 55% margin when the stock is selling at

$20

a share. The broker charges a

10%

annual interest rate, and commissions are

3%

of the total stock value on both the purchase and sale. A year later you receive a

$0.50

per share dividend and sell the stock for

$27

. What is your rate of return on the investment?\ You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high of 56 . Your broker tells you that your margin requirement is

45%

and that the commission on the purchase is

$155

. While you are short the stock, Charlotte pays a

$2.50

per share dividend. At the end of one year, you buy 100 shares of Charlotte at 45 to close out your position and are charged a commission of

$145

and

8%

interest on the money borrowed. What is your rate of return on the investment?\ Suppose you have

$5,000

to invest and want to buy as much stock in Qwest Communications as is possible using margin debt. If your brokerage requires

50%

market and briefly discuss the characteristics of a good market. 2) Define liquidity and discuss the factors that contribute to it. Give examples of a liquid asset and an illiquid asset, and discuss why they are considered liquid and illiquid. 3) Define the primary and secondary market for securities and discuss how they differ. Discuss why the primary market is dependent on the secondary market. 4) Briefly define each of the following terms and give an example. a) Market order b) Limit order c) Short sale d) Stop loss order 5) The initial margin requirement is 60%. You have $40,000 to invest in a stock selling for $80 a share. Ignoring taxes and commissions, show in detail the impact on your rate of return if the stock rises to $100 a share and if it declines to $40 a share assuming; (a) you pay cash for the stock, and (b) you buy it using maximum leverage 6) Lauren has a margin account and deposits $50,000. Assuming the prevailing margin requirement is 40%, commissions are ignored, and The Gentry Shoe Corporation is selling at $35 per share: a) How many shares can Lauren purchase using the maximum allowable margin? b) What is Lauren's profit (loss) if the price of Gentry's stock i. Rises to $45 ? ii. Falls to $25 c) If the maintenance margin is 30%, to what price can Gentry Shoe fall before Lauren will receive a margin call? 7) Suppose you buy a round lot of Maginn Industries stock on 55% margin when the stock is selling at \$20 a share. The broker charges a 10\% annual interest rate, and commissions are 3% of the total stock value on both the purchase and sale. A year later you receive a $0.50 per share dividend and sell the stock for $27. What is your rate of return on the investment? 8) You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high of 56. Your broker tells you that your margin requirement is 45% and that the commission on the purchase is $155. While you are short the stock, Charlotte pays a $2.50 per share dividend. At the end of one year, you buy 100 shares of Charlotte at 45 to close out your position and are charged a commission of $145 and 8% interest on the money borrowed. What is your rate of return on the investment? 9) Suppose you have $5,000 to invest and want to buy as much stock in Qwest Communications as is possible using margin debt. If your brokerage requires 50%