QUESTION 14

1. Megan bought 200 shares of stock at a price of $10 a share. She used her margin account with a 75% initial margin to make the purchase. After a year, the price of the stock is $12 a share. What is the new margin on her account?

   		89%
   		79%
   		74%
   		84%

QUESTION 15

1. Megan bought 200 shares of stock at a price of $10 a share. She used her 75% margin account to make the purchase. Megan sold her stock after a year for $12 a share. Ignoring margin interest and trading costs, what is Megan's rate of return for this investment? (Round to the nearest percent)

   		27%
   		20%
   		67%
   		17%

QUESTION 16

1. If an investor does not respond to a margin call, the broker will

   		sell some of the investor's holdings to cover the margin call.
   		sell all of the investor's holdings and close their brokerage account.
   		sell enough of the investor's holdings that the margin account can be closed.
   		notify the Federal Reserve so they can cover the call.

QUESTION 17

1. Lucille sells short 100 shares of Bluth Company stock at $45 per share and six months later purchases the shares at $35.00 each. Ignoring brokerage fees, Lucille will

   		earn a total profit of $1,200.
   		lose a total of $1,000.
   		lose a total of $1,200.
   		earn a total profit of $1,000.

QUESTION 18

1. The Dow Jones Industrial Average (DJIA) is based on the prices of

   		200 stocks.
   		30 stocks.
   		100 stocks.
   		500 stocks.

QUESTION 19

1. The Standard & Poors 500 stock index illustrates

   		a geometric index
   		a simple average
   		a value-weighted index
   		an exponential index