Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 5 (3 points) Assume you had purchased Citicorp for $33 a share. Since then the stock price has risen to $40 a share. What

image text in transcribed

Question 5 (3 points) Assume you had purchased Citicorp for $33 a share. Since then the stock price has risen to $40 a share. What type of order could you use to sell the stock only if the price started to fall? 1) Market order 2) Limit buy order 3) Limit sell order 4) Stop-loss order Question 6 (3 points) Assume you buy $50,000 worth of stock using 60% margin. What does that mean? 1) You borrowed $30,000 and put up $20,000 of your own money. 2) You borrowed $20,000 and put up $30,000 of your own money. 3) You put up $50,000 of your own money and borrowed $30,000 more. 4) You put up $30,000 of your own money and borrowed $50,000 more. Question 7 (3 points) Assume you buy $50,000 worth of stock using 60% margin. Assume your borrowing costs are 10% per year and you expect the stock price to go from $100 to $110 over the next year. What is your dollar return after borrowing costs? 1) $5.000 21 $3.000 3) $7.000 4) $2,000 Question 8 (3 points) Before 1933, the initial margin was only 10% and the maintenance margin was only 5%. Approximately how far could stock prices fall based on the initial purchase price before an investor's equity would be completely wiped out? Assume only 10% margin was used 1) 5% 2) 10% 3) 30/0 4) 50%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Forecasting And Predictive Analytics With Forecast X

Authors: Barry Keating, J. Holton Wilson, John Solutions Inc.

7th International Edition

1260085236, 9781260085235

More Books

Students also viewed these Finance questions

Question

What are the inputs to master scheduling? What are the outputs?

Answered: 1 week ago