55.
Assume you sell short 1,000 shares of common stock at $35 per share, with initial margin
at 50%. What would be your rate of return if you repurchase the stock at $25 per share?
The stock paid no dividends during the period, and you did not remove any money from the
account before making the offsetting transaction.
56.
Assume you sell short 100 shares of common stock at $30 per share, with initial margin at
50%. What would be your rate of return if you repurchase the stock at $35 per share? The
stock paid no dividends during the period, and you did not remove any money from the
account before making the offsetting transaction.
57.
You want to purchase GM stock at $40 from your broker using as little of your own money
as possible. If initial margin is 50% and you have $4,000 to invest, how many shares can
you buy?
58.
You want to purchase IBM stock at $80 from your broker using as little of your own money
as possible. If initial margin is 50% and you have $2,000 to invest, how many shares can
you buy?
59.
Assume you sold short 100 shares of common stock at $40 per share. The initial margin is
50%. What would be the maintenance margin if a margin call is made at a stock price of
$50?
60.
Assume you sold short 100 shares of common stock at $70 per share. The initial margin is
50%. What would be the maintenance margin if a margin call is made at a stock price of
$85?
61.
You sold short 100 shares of common stock at $45 per share. The initial margin is 50%. At
what stock price would you receive a margin call if the maintenance margin is 35%?
62.
You sold short 100 shares of common stock at $75 per share. The initial margin is 50%. At
what stock price would you receive a margin call if the maintenance margin is 30%?
63.
The preliminary prospectus is referred to as a
64.
The securities act of 1933
I) requires full disclosure of relevant information relating to the issue of new securities.
II) requires registration of new securities.
III) requires issuance of a prospectus detailing financial prospects of the firm.
IV) established the SEC.
V) requires periodic disclosure of relevant financial information.
VI) empowers SEC to regulate exchanges, OTC trading, brokers, and dealers.
65.
The Securities Act of 1934
I) requires full disclosure of relevant information relating to the issue of new securities.
II) requires registration of new securities.
III) requires issuance of a prospectus detailing financial prospects of the firm.
IV) established the SEC.
V) requires periodic disclosure of relevant financial information.
VI) empowers SEC to regulate exchanges, OTC trading, brokers, and dealers.
66.
Which of the following is not required under the CFA Institute Standards of Professional
Conduct?
67.
According to the CFA Institute Standards of Professional Conduct, CFA Institute members
have responsibilities to all of the following except
Short Answer Questions
68.
Discuss margin buying of common stocks. Include in your discussion the advantages and
disadvantages, the types of margin requirements, how these requirements are met, and
who determines these requirements.
69.
List three factors that are listing requirements for the New York Stock Exchange. Why does
the exchange have such requirements?