1. You short-sell 10 shares of Amazon.com, Inc today. The stock price is $2,000 per share. What is your maximum possible gain of this trade when you cover your position in the future (ignoring transactions costs)?

   		$2,000
   		$10,000
   		$20,000
   		$100,000
   		Unlimited

2. On January 1, you sold short 200 shares of Walt Disney Co at $150 per share and pledged 50% initial margin. On March 1, a dividend of $10 per share was paid. On June 1, you closed your position buying 200 shares at $170 per share. What is your rate of return?

   		-30%.
   		-35%.
   		-40%.
   		-70%
   		None of the above

3. On Jan 1, you sold short 400 shares of AT&T at $35 per share. You post $7000 to the margin account. On April 1, you received a margin call on this trade. Assume the minimum margin requirement is 40%, what is the price of the stock that triggered the margin call?

   		$29.17
   		$37.5
   		$39.25
   		$43.75
   		None of the above

4. On Jan 1, you sold short 400 shares of Microsoft at $30 per share. You post $7200 to the margin account. On April 1, you received a margin call on this trade. Assume the minimum margin requirement is 25% and you receive a margin call. What amount must you top-up to restore to a 60% margin?

   		$1880
   		$2400
   		$3360
   		$3840
   		None of the above

5. You purchased 500 shares of common stock at $5 per share on margin. The initial margin is 50%, and the stock pays no dividend. Your rate of return would be __________ if you sell the stock at $8 per share. Ignore interest on margin. (Please round to the nearest %.)

   		50%
   		60%
   		80%
   		120%
   		None of the above

6. You sell short 400 shares of Apple that are currently selling at $200 per share. You post the 60% margin required on the short sale, and the maintenance margin requirement is 25%. At what price would you receive a margin call (assume the margin call happens immediately).

   		$240
   		$248
   		$256
   		$260
   		None of the above

7. You short-sell 150 shares of Lake Bled Fishing Co., now selling for $45 per share. To limit your loss to approximately $3,000, you should place a stop-buy order at ____. (Assume the market is liquid.)

   		$55.00
   		$60.00
   		$65.00
   		$70.00
   		None of the above

8. Investor X puts up $10,000 but borrows an equal amount of money from her broker to double the amount invested to $20,000. The broker charges 8% interest on the loan. The stock was originally purchased at $10 per share and in one year, Investor X sells the stock for $12. Investor Y does not believe in borrowing to buy shares and invests $20,000 of his own money in the same stock. What is the difference in rate of return between Investor X and Investor Y?

   		0%
   		2%
   		6%
   		12%
   		None of the above

9. You borrow $25,000 and buy 1000 shares of Facebook at $50 per share on margin. The interest on the loan is 5%. One year from now the price is $51.25. Assume no dividends are paid. Calculate your rate of return and the final margin %.

   		rate of return=0%, final margin=48.8%
   		rate of return=0%, final margin=50%
   		rate of return=-5%, final margin=48.8%
   		rate of return=-5%, final margin=50%
   		None of the above

10. An investor invests 60% of her wealth in the market portfolio with an expected rate of return of 12% and a variance of 0.01, and she puts the rest in Treasury bills that pay 2% per year. What is the standard deviation of the portfolio?

    		4%
    		6%
    		7.5%
    		10%
    		None of the above