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Q1) You bought 100 shares of ABC common stock on margin at $50 per share. Suppose the initial margin is 50% and maintenance margin is 30%. Below stock price of __________ you would get margin call. Suppose stock pays no dividend and ignore interest on margin.

A) $35.71

B) $42.86

C) $53.57

D) $57.14

Q2) You bought 300 shares of common stock on margin for $50 per share. Initial margin is 60% and stock pays no dividend. Your rate of return would be __________ if you sell stock at $40 per share. Ignore interest on margin.

A) 33%

B) -33%

C) -44%

D) -56%

Q3) The return on risky portfolio is 15%. Risk-free rate as well as investor's borrowing rate is 10%. The standard deviation of return on risky portfolio is 20%. If standard deviation on the complete portfolio (one that includes risky and riskless assets) is 25%, expected return on the complete portfolio is __________.

A) 6.00%

B) 8.47%

C) 10.00%

D) 16.25%

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M921534

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