Common stock traded in the otc market

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Reference no: EM131878654

1. Hal is a market maker in ABCD common stock traded in the OTC Market. ABCD is currently quoted 36 1/8 - 37 7/8. Assuming no change in the spread, if Marcy wishes to buy stock in ABCD, she should expect to pay:

At least 37 7/8 per share

Less than 37 7/8 per share

No more than 36 1/8 per share

More than 36 1/8 per share, but less than 37 7/8 per share

2. Marvin likes to trade on margin. On January 3, 2011, Marvin purchased 200 shares of ABC Corporation common stock at a $15 per share price. The margin requirement is 50%, and Marvin pays a commission rate equal to 2% of any purchase cost or sale. Marvin must pay his broker 10% interest on his margin account. If Marvin sells the stock exactly one year later at a $20 per share price, and ABC pays total cash dividends over the one year period of $.40 per share, what was the percentage return (excluding capital gains taxes) that Marvin earned on the margin purchase?

30.72%

33.33%

36.00%

51.44%

Reference no: EM131878654

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