Reference no: EM132846769
Questions -
Q1) Megan bought 200 shares of stock at a price of $10 a share. She used her 70% margin account to make the purchase. Megan sold her stock after a year for $12 a share. Ignoring margin interest and trading costs, what is Megan's return on investor's equity for this investment?
A) 67%
B) 29%
C) 14%
D) 10%
Q2) Joseph bought 100 shares of stock at a price of $24 a share. He used his 70% margin account to make the purchase. Joseph sold his stock after a year for $20 a share. Ignoring margin interest and trading costs, what is Joseph's return on investor's equity for this investment?
A) -17%
B) -24%
C) 24%
D) -56%
Q3) Michael purchased 1000 shares of stock at a price of $16 a share. He utilized his 50% margin account to make the purchase. What is Michael's initial equity in this investment?
A) -$16,000
B) $16,000
C) $8,000
D) -$8,000
Q4) Jessica purchased 200 shares of stock at $38 using her 70% margin account. Her maintenance margin is 40%. Jessica has no other securities in her account. At what price will she receive a margin call?
A) $26.60
B) $19.00
C) $11.40
D) $7.60
Q5) Emily bought 200 shares of ABC Co. stock for $29.00 per share on 60% margin. Assume she holds the stock for one year and that her interest costs will be $80 over the holding period. Ignoring commissions, what is her percentage return (loss) on invested capital if the stock price went down 10%?
A) -32%
B) -19%
C) -16%
D) -10%
Q6) Gerry bought 100 shares of stock for $30.00 per share on 70% margin. Assume Gerry holds the stock for one year and that his interest costs will be $45 over the holding period. Gerry also received dividends amounting to $0.30 per share. Ignoring commissions, what is his percentage return on invested capital if he sells the stock for $34 a share?
A) 106.17%
B) 20.48%
C) 18.33
D) 9.16%
Q7) Justin just made a margin purchase of 100 shares of DEF Corp. for $22.50 per share. The initial margin is 70%. The maintenance margin is 30%. How low can the price of each share of DEF be before Justin will have to add equity to his account?
A) $4.73
B) $5.25
C) $6.75
D) $9.64
Q8) Jocelyn sells short 1000 shares of JKLO stock at $31.25 per share and six months later purchases the shares at $29.00 each. Ignoring margin interest and brokerage fees, Nancy will
A) earn a total profit of $3,125.
B) lose a total of $2,900.
C) earn a total profit of $2,250.
D) Lose a total of $2,250.
Q9) Last week, Seward Company stock was selling at $66 a share when Ryan sold 300 shares of the stock short. Today Ryan bought 300 shares of the same stock at a price of $70.00 share to cover his position. Ignoring trading costs, what is the dollar return on Ryan's investment?
A) $1,200
B) -$400
C) $400
D) $-1,200