Question -01

a. Define short sell assumption with examples and how the short interest ratio indicates about the upcoming market trend that investors will capitalize to derive gain in light of Dhaka Stock Exchange last 60 days trading pattern?

b. Briefly explain how market order consumes liquidity and limit order supplies liquidity in the stock market?

Question-02

a. Differentiate between full service broker and online discount broker and Show investors behavior toward risk preference in the context of Bangladeshi investors in Dhaka Stock Exchange.

b. Assume that the price change component for common stocks was 6.75 percent for the period of 2010 to 2018 in the Dhaka Stock Exchange. The investor was invested 125,000 tk. At the beginning of 2010 and the wealth value stands 245,000 tk. at the end of 2018. Calculate return for yield component and geometric mean for common stocks.

Question-03

a. An initial margin requirement is 55 percent and maintenance margin of 45 %. An investor buys BANGAS, 9500 shares of stock on margin at Tk. 68.70 per share. The price of the stock subsequently drops to tk. 59.80.

i.Find the amount investor has to deposit for initiating the transaction.

ii.What is the actual margin at tk. 45 share price is the account restricted?

iii.Calculate the margin call price, if the price rises to tk. 47.56, is there a margin call? And what amount is required to bring back account into operational at price of tk. 53.90?

b. Differentiate between margin account and asset management account with examples.

Question-04

The return of Dhaka stock Exchange, DSEX index as following from 2010 to 2015,

YearDSEX index TR (%)DSEX index Return Relative

2010-06.140.9386

201120.001.200

201207.931.0793

201315.531.1553

2014-17.650.8235

201525.881.2588

a.Calculate the cumulative wealth index for stock return of DS 30 share for the period of 2010-2015. Given geometric rate of inflation is 3.68%, calculate inflation adjusted cumulative wealth index and interpret the findings (assuming initial investment of 1,00,000Tk)

b.Calculate the Geometric Mean for the period of 2010 to 2015; interpret findings compare with arithmetic mean. Construct a set of TRs that will produce a geometric mean equal to the arithmetic mean.

Question-05

Mr. Azam using his margin account purchases 1350 lots of DBBL shares at tk. 95.27, believing it's underpriced. This transaction is done on margin, which annual interest rate cost is 11.5%, 125 days later DBBL has declined to tk. 75.90 per share and he sold out all the shares. And at the mean time he received of 275% cash dividend and 8% stock. Brokerage cost of tk. 15.55 per lot on each transaction and 10 shares make one lot.. Note: (FV =Tk. 10, CMP=77.31 Tk.)

i.Margin requirement is 58 percent Calculate Mr. Azam gain or loss on this position, considering both margin interest and the transaction costs and dividend and ROI.

ii.Maintenance margin is 48%, is there any margin call at selling price and justified his decision already taken.

iii.What is the actual margin at Tk. 185 per share is the account restricted? How much amount investor needs to deposit bring back the account in operation.

b. Briefly explain the steps that are involved in American Depository Receipts (ADRs) process with major advantages.