Jackie has a margin account with a balance of $150,000. The initial margin deposit is 60 per cent and Turtle Industries is currently selling at $50 per share. How many shares of Turtle can Jackie purchase? Select one: A. 1,800 C B. 5,000 C. 3,000 C D. 1,200
Jackie has a margin account with a balance of $150,000. The initial margin deposit is 60 per cent and Turtle Industries is currently selling at $50 per share. How many shares of Turtle can Jackie purchase? Select one: A. 1,800 C B. 5,000 C. 3,000 C D. 1,200
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 6P
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Transcribed Image Text:Jackie has a margin account with a balance of $150,000. The initial margin deposit is
60 per cent and Turtle Industries is currently selling at $50 per share. How many
shares of Turtle can Jackie purchase?
Select one:
A.
1,800
ܝ
B.
5,000
50 U mo
C.
3,000
D.
1,200
You buy shares of RossCorp for $45 per share. Brokerage commissions are 2% for
purchases and 2% for sales. The interest rate on margin debt is 6.25% per year. The
maintenance margin is 30%. At the end of one year, you sell your shares of RossCorp
for $55 per share. During the time you held RossCorp you received dividends of
$0.85 per share. If you paid the full cost of the purchase, what is your rate of return?
Select one:
A.
18.08%
C
B.
. ܬ
22.32%
O
C.
23.51%
C
D.
19.28%
Transcribed Image Text:An individual with only $10,000 to invest is most likely better off investing in
Select one:
A.
ETFs to increase the diversification.
B.
individual equities to increase portfolio efficiency.
C
C.
individual bonds and individual equities to increase efficiency.
D.
mutual funds to increase the expected return.
What is the correlation coefficient for two assets with a covariance of .0032, if asset 1 has a
standard deviation of 12 per cent and asset 2 has a standard deviation of 9 per cent?
Select one:
C
A.
0.3456
C
B.
1.5980
C.
0.8721
D.
0.2963
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