USE THE FOLLOWING INFORMATION FOR QUESTIONS 1 & 2 You have been watching Anglo Platinum (JSE: AMS) and believe that the share price should increase over the next two months. Assuming that your broker charges a borrowing rate of 7% a year, requires an initial margin of 60%, maintenance margin of 30% and an initial assumed exposure of 1000 shares, calculate: Time Bid Ask Today 28.25 29.38 Two months time 31.30 32.55 Question 1 The return on then margin strategy is closest to: A) 13.08% B) 11.71% C) 6.69% D) 8.06% E) 10.14% Question 2 The price equal to or below which you will get a margin call is closest to: A) R21.66 B) R19.39 C) R16.79 D) R13.35 E) R22.41 2 Question 3 Which of the following statements are false: A) A nominal bonds Macaulay Duration is lower than its maturity B) A zero-coupon bonds Macaulay Duration lower than its maturity C) Convexity represents the changes in bond price relative to changes in duration D) A bond with a coupon rate identical to its yield to maturity will have a price equal to par value E) Bond prices are driven by supply and demand