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QUESTION 6

1. Assume you purchased 200 shares of XYZ common stock on margin at $100 per share from your broker. If the initial margin is 70%, the amount you borrowed from the broker is _________.

   		$5,000
   		$14,000
   		$6,000
   		$7,000

0.3 points

QUESTION 7

1. You borrowed 100 shares of IBM from your broker and sold them at the price of $145 per share. You put in $8700 in cash buffer. The broker charges an interest rate of 10% per year on the stock loan. One year later, you bought back the 100 Intel shares to return to your broker. At that time, the price per share is $138. The return of this trade is_______________

   		-28%
   		-8.6%
   		15%
   		10%

0.3 points

QUESTION 8

1. You have the following rates of return for a risky portfolio for several recent years:

   year	return
   2008	-20%
   2009	30%
   2010	5%

   The annualized (geometric) average return on this investment is _____.

   		7.65%
   		5.41%
   		3.54%
   		2.98%

0.3 points

QUESTION 9

1. Suppose you pay $9,500 for a $10,000 par Treasury bill maturing in 9 months. What is the effective annual rate of return for this investment?

   		6.38%
   		4.25%
   		7.08%
   		2.58%

0.3 points

QUESTION 10

1. The price of a stock is $55 at the beginning of the year and $50 at the end of the year. If the stock paid a $2 dividend and inflation was 2%, what is the real holding-period return for the year?

   		-3.64%
   		-6.44%
   		-7.3%
   		-5.24%

0.3 points

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