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Suppose an investor is pessimistic about the Caterpillar (NYSE CAT) stock. She prepares to sell short 100 shares of common stocks. The current selling price
Suppose an investor is pessimistic about the Caterpillar (NYSE CAT) stock. She prepares to sell short 100 shares of common stocks. The current selling price of the stock is $150. The requirement for initial margin is 50% and the account requires a 40% maintenance margin. What will be the stock price that triggers a margin call?
An investor is interested in selling a T-bill which is quoted with a 3.75% ask yield and a 3.95% bid yield. The bill has 80 days until maturity. What will be the price that the investor could sell for? (note that Treasury bill has a $10,000 face value and uses bank discount rate method)
An investor is interested in constructing a portfolio that consists of both J&J stock and Treasury bond. She puts half of the wealth in J&J that has an expected return of 18% and a standard deviation of 26%. Then she puts the rest of her wealth in the Treasury bond that has an expected return of 5% and a standard deviation of 10%. Assuming the two securities have a correlation of .60. Please calculate the standard deviation of the portfolio.
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