Investments & Securities Chapter 3 You Want Purchase Xon Stock 60

Difficulty: Basic

36.

You want to purchase XON stock at $60 from your broker using as little of your own money

as possible. If initial margin is 50% and you have $3,000 to invest, how many shares can

you buy?

37.

A sale by IBM of new stock to the public would be a(n)

38.

The finalized registration statement for new securities approved by the SEC is called

39.

One outcome from the SEC investigation of the “Flash Crash of 2010″ was

40.

All of the following are considered new trading strategies except

41.

You sell short 100 shares of Loser Co. at a market price of $45 per share. Your maximum

possible loss is

42.

You buy 300 shares of Qualitycorp for $30 per share and deposit initial margin of 50%. The

next day, Qualitycorp’s price drops to $25 per share. What is your actual margin?

43.

When a firm markets new securities, a preliminary registration statement must be filed

with

44.

In a typical underwriting arrangement the investment banking firm

I) sells shares to the public via an underwriting syndicate.

II) purchases the securities from the issuing company.

III) assumes the full risk that the shares may not be sold at the offering price.

IV) agrees to help the firm sell the issue to the public, but does not actually purchase the

securities.

45.

Which of the following is true regarding private placements of primary security offerings?

46.

A specialist on the AMEX Stock Exchange is offering to buy a security for $37.50. A broker

in Oklahoma City wants to sell the security for his client. The Intermarket Trading System

shows a bid price of $37.375 on the NYSE. What should the broker do?

47.

You sold short 100 shares of common stock at $45 per share. The initial margin is 50%.

Your initial investment was

48.

You sold short 150 shares of common stock at $27 per share. The initial margin is 45%.

Your initial investment was

49.

You purchased 100 shares of XON common stock on margin at $60 per share. Assume the

initial margin is 50% and the maintenance margin is 30%. Below what stock price level

would you get a margin call? Assume the stock pays no dividend; ignore interest on

margin.

50.

You purchased 1000 shares of CSCO common stock on margin at $19 per share. Assume

the initial margin is 50% and the maintenance margin is 30%. Below what stock price level

would you get a margin call? Assume the stock pays no dividend; ignore interest on

margin.

51.

You purchased 100 shares of common stock on margin at $40 per share. Assume the initial

margin is 50% and the stock pays no dividend. What would the maintenance margin be if a

margin call is made at a stock price of $25? Ignore interest on margin.

52.

You purchased 1,000 shares of common stock on margin at $30 per share. Assume the

initial margin is 50% and the stock pays no dividend. What would the maintenance margin

be if a margin call is made at a stock price of $24? Ignore interest on margin.

53.

You purchased 100 shares of common stock on margin for $50 per share. The initial margin

is 50% and the stock pays no dividend. What would your rate of return be if you sell the

stock at $56 per share? Ignore interest on margin.

54.

You purchased 100 shares of common stock on margin for $35 per share. The initial margin

is 50% and the stock pays no dividend. What would your rate of return be if you sell the

stock at $42 per share? Ignore interest on margin.