Typically, people buy shares of stock in the expectation that the stock's price will increase, but it is also possible to make money by correctly anticipating that a stock's price will decline -- "selling short." Assume that you think that Volkswagen (VW) stock is going to decline in price over the next few months because of continuing uncertainty about why the company cheated on its emissions testing. A share of VW stock is currently selling for $50. You arrange to borrow 100 shares of VW stock for three months for a price of $1 per share. You immediately sell the 100 shares. Three months later, sure enough, VW stock is selling for only $42 per share. You then purchase 100 shares at $42 each and return the 100 shares of VW stock that you borrowed. How much money did you make or lose?

Lost $800

Lost $600

Earned $600

Earned $700

Earned $800.

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Question 442 pts

Alison is currently 35 years old. On Alison's 21st birthday, she started saving $2000 per year. She made 15 annual $2000 deposits, with the last being on her 35th birthday. In other words, she contributed $30,0000. Throughout this 15-year period, she earned 8% on her savings. For the next 30 years, her money is expected to grow at 4% interest. Approximately, how much will she have in her savings account on her 65th birthday, that is, 30 years after making her last deposit? (Hint: The answer requires two time value of money calculations.)

$35,000

$55,000

$110,000

$135,000

$175,000

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Question 452 pts

Pete Peterson is 66 years old and has just attended his retirement party. He has amassed $1.36 million in retirement savings. He and his spouse have figured out that during retirement they need to withdraw $100,000 at the end of each year from their retirement savings to maintain the standard of living that they would like to have. If they can earn 4% interest on the unspent balance in their retirement account, how many years will it be before their retirement savings are exhausted.

14

17

20

23

26

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Question 462 pts

Suppose you think that the market price of a share of Facebook will increase in the next few months from its current price of $100 per share. Suppose as well that you have $5,000 to invest -- enough money to buy 50 shares. If you buy on margin, though, you can purchase an additional 50 shares for a total of 100 shares. (This assumes a 50% margin requirement.) If three months from now Facebook stock is worth $115 per share and you sell your shares, how much MORE money did you make by buying on margin compared to buying shares without the use of margin.

500

750

1000

1250

1500

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Question 472 pts

Jacob and Esau are twins. Starting at the age of 25 and lasting 10 years, Jacob puts $3000 into a tax-deferred savings account at the end of each year. He earns 6% interest. He stops making contributions but leaves the money in his retirement account for another 30 years, still earning 6% interest. Esau starts saving for retirement at the age of 35 and, to catch up with Jacob, puts $4000 in his tax-deferred account for each of the next 30 years. Esau also earns 6% interest on his investment during this period. At the age of 65, how do their retirement account accumulations compare?

Jacob has about $180,000 more than Esau

Jacob has about $90,000 more than Esau

Jacob and Esau have roughly the same amount

Esau has bout $90,000 more than Jacob

Esau has about $180,000 more than Jacob

Typically, people buy shares of stock in the expectation that the stock's price will increase, but it is also possible to make money by correctly anticipating that a stock's price will decline -- "selling short." Assume that you think that Volkswagen (VW) stock is going to decline in price over the next few months because of continuing uncertainty about why the company cheated on its emissions testing. A share of VW stock is currently selling for $50. You arrange to borrow 100 shares of VW stock for three months for a price of $1 per share. You immediately sell the 100 shares. Three months later, sure enough, VW stock is selling for only $42 per share. You then purchase 100 shares at $42 each and return the 100 shares of VW stock that you borrowed. How much money did you make or lose?

Lost $800

Lost $600

Earned $600

Earned $700

Earned $800.

Flag this Question

Question 442 pts

Alison is currently 35 years old. On Alison's 21st birthday, she started saving $2000 per year. She made 15 annual $2000 deposits, with the last being on her 35th birthday. In other words, she contributed $30,0000. Throughout this 15-year period, she earned 8% on her savings. For the next 30 years, her money is expected to grow at 4% interest. Approximately, how much will she have in her savings account on her 65th birthday, that is, 30 years after making her last deposit? (Hint: The answer requires two time value of money calculations.)

$35,000

$55,000

$110,000

$135,000

$175,000

Flag this Question

Question 452 pts

Pete Peterson is 66 years old and has just attended his retirement party. He has amassed $1.36 million in retirement savings. He and his spouse have figured out that during retirement they need to withdraw $100,000 at the end of each year from their retirement savings to maintain the standard of living that they would like to have. If they can earn 4% interest on the unspent balance in their retirement account, how many years will it be before their retirement savings are exhausted.

14

17

20

23

26

Flag this Question

Question 462 pts

Suppose you think that the market price of a share of Facebook will increase in the next few months from its current price of $100 per share. Suppose as well that you have $5,000 to invest -- enough money to buy 50 shares. If you buy on margin, though, you can purchase an additional 50 shares for a total of 100 shares. (This assumes a 50% margin requirement.) If three months from now Facebook stock is worth $115 per share and you sell your shares, how much MORE money did you make by buying on margin compared to buying shares without the use of margin.

500

750

1000

1250

1500

Flag this Question

Question 472 pts

Jacob and Esau are twins. Starting at the age of 25 and lasting 10 years, Jacob puts $3000 into a tax-deferred savings account at the end of each year. He earns 6% interest. He stops making contributions but leaves the money in his retirement account for another 30 years, still earning 6% interest. Esau starts saving for retirement at the age of 35 and, to catch up with Jacob, puts $4000 in his tax-deferred account for each of the next 30 years. Esau also earns 6% interest on his investment during this period. At the age of 65, how do their retirement account accumulations compare?

Jacob has about $180,000 more than Esau

Jacob has about $90,000 more than Esau

Jacob and Esau have roughly the same amount

Esau has bout $90,000 more than Jacob

Esau has about $180,000 more than Jacob