Now it is May $1$st$,2022,$ the price of Eye City stock dropped to $$24.$ Tom is super

excited! He said to his broker $$I told you; this is going to be a penny stock in no time,

and I am going to be rich!!$$ His broker did not agree to that and advised him to cover his

position and get out of it before the price bounces again. But he didn$$t listen.

$10)$ If the maintenance margin on short$-$selling transactions is $30\%,$ how far can the EC price

decline before triggering a margin call?

a$)$ Any Price declines trigger a margin call

b$)$ Price declines don$$t trigger a margin call

c$)$ The price must decline to $$22\mathrm{.}3$ to trigger a margin call

d$)$ The price must decline by $30\%$ to trigger a margin call

e$)$ The price must decline to be $$2$ to trigger a margin call

$11)$ How far could EC stock price rise before Tom receives a margin call?

a$)$ Price increases don$$t trigger a margin call.

b$)$ The price that would trigger a margin call is $ $46\mathrm{.}67.$

c$)$ The price that would trigger a margin call is $ $27\mathrm{.}7.$

d$)$ The price that would trigger a margin call is $ $32\mathrm{.}3.$

e$)$ Any increase in the price would trigger a margin call.

$$ Now, it is Dec $2022,$ The municipal bond is now redeemed. However, the last few

months have been like a nightmare for Tom. EC stock price has been consistently rising.

The price hits $$48$ and Tom just received a margin call, so he decided to use the proceeds

from his other investment in the money market to cover his position at the current price.

$12)$ How much money did he earn from his investment in Texas state bonds, assuming his

income tax rate is $30\%?$

a$)$ $$54,600$

b$)$ $$38,220$

c$)$ $$818,220$

d$)$ $$834,600$

e$)$ $$39,200$

$13)$ How much more money did he need to deposit in his account to cover his short$-$selling

position and get out of this investment experience? $$assuming no fees or dividends

needed to be paid$$

a$)$ $$1,920,000$

b$)$ $$240,000$

c$)$ $$1,360,000$

d$)$ $$1,680,00$

e$)$ $$260,000$

$14)$ How much money does Tom have now in total?

a$)$ $$100,000$

b$)$ $$220,000$

c$)$ $$780,500$

d$)$ $$140,000$

e$)$ $$594,600$

$$ Now, it is early $2023.$ Tom is looking back at his investment experience and is trying to

learn his lessons! But this time, he decided that the days of picking single stocks are over!

And he became too busy to have such an active trading style. This time, Tom wants to try

investing his money in a fund and he has a total of $ $1000,000$ to invest after he

convinced his wife to invest part of her savings with him. Currently, Tom is considering

two alternatives:

$$ alternative A: Bloom open$-$end fund with a net asset value of $$15$ per share and a front$-$

end load of $5\%.$

$$ alternative B: TWE closed$-$end fund with an offering price of $$14$ per share and it is

selling at a discount.

$15)$ What is the offering price of the Bloom fund?

a$)$ $$15\mathrm{.}79$

b$)$ $$11\mathrm{.}76$

c$)$ $$16\mathrm{.}25$

d$)$ $$17\mathrm{.}2$

e$)$ $$14\mathrm{.}25$

$16)$ Tom decided to go with the fund that has a lower current offering price. Which fund

would he choose?

a$)$ Bloom

b$)$ TWE

$$ One year later, now it is Dec $31$st$,2023$: the net asset value of the fund that he chose is

$$16.$ The fund is now selling at a premium of $9\%.$ And the fund paid year$-$end

distributions of income and capital gains of $$1\mathrm{.}40.$

$17)$ If Tom decided to liquidate his investment in this fund now, what would be his rate of

return?

a$)24\mathrm{.}28\%$

b$)14\mathrm{.}28\%$

c$)9\mathrm{.}00\%$

d$)34\mathrm{.}57\%$

e$)11\mathrm{.}4\%$

$18)$ About how much will he and his wife have in total after he does so$?$before paying their

taxes$$

a$)$ $$1000,000$

b$)$ $$1,345,714$

c$)$ $$654,300$

d$)$ $$242,800$

e$)$ $$757,200$