FI 414 Quiz: FI 414 Quiz 1

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turquoisegnu128

31 Jan 2019

School

University of Alabama

Department

FIN

Course

FI 414

Professor

All

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Document Summary

Instructions: please show all work: you purchased 100 shares of abc common stock on margin at per share. Assume the initial margin is 50% and the maintenance margin is 30%. Assume the stock pays no dividend and ignore interest on margin: suppose the stock goes to . Part b: multiple choice problems (20 problems, 4 points each) The offering price for the shares was , but immediately upon issue, the share price jumped to . What is the best estimate of the total cost to. What is the net asset value (nav) of these shares: , , , , investors who wish to liquidate their holdings in a closed-end fund may. ___________________: sell their shares back to the fund at a discount, sell their shares back to the fund at net asset value, sell their shares on the open market, none of the above.

Related Questions

Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $105 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $105 to $110.00, and the stock has paid a dividend of $17.00 per share.

a.	What is the remaining margin in the account?

Remaining margin

b-1.

What is the margin on the short position? (Round your answer to 2 decimal places.)

Short margin

b-2.

If the maintenance margin requirement is 30%, will Old Economy receive a margin call?

	Yes
	No

c.	What is the rate of return on the investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

Rate of return

25.

Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $45 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $45 to $49.50, and the stock has paid a dividend of $5.40 per share.

a. What is the remaining margin in the account?

Remaining margin [ ] $

b-1. What is the margin on the short position? (Round your answer to 2 decimal places.)

Short margin [ ] %

b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin call?

	Yes
	No

c. What is the rate of return on the investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

Rate of return [ ] %

ultramarinehyena107

1.You buy 100 shares of Starbucks at $55. At the end of the year it is selling for $65. What is the percentage return of your investment?

2.In problem one you make the same investment. However, you do not have $5,500 to invest so you open a margin account. You are able to put up 60% per share and borrow the rest from the broker. The broker charges you brokers call (2%) plus 1. What is your return at the end of the year?

3.Redo 1 and 2 assuming that Starbucks paid a $1.50 dividend.

4.Redo 1 and 2 assuming that during the year it was announced that Starbucks is losing market share to competitors and the stock has tumbled to $45. (do not include the dividend in question 3 in this problem)

5.If the broker requires a maintenance margin of 35%, at what price will you get a margin call?

6.You sell Visa short at $70 per share. At the end of the year you close out your position when V is selling for $60 per share. You are required to put up 60% of the original stock price plus the amount you sell V for ($70). What is your percentage return? How does your return change if V pays a $2.60 dividend?

FI 414 Quiz: FI 414 Quiz 1

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