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1、Chapter01 municipal bond carries a coupon of 634% and is trading at par; to a taxpayer in a 34% tax bracket, this bond would provide a taxable equivalent yield of:a. 4.5% b. % c. % d. %2. Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outsta
2、nding at time t. Stock C splits two for one in the last period.calculate the return rate of market-value-weighted index of the three stocks at T =1.Chapter 02031. Suppose that you sell short 100 shares of IBX, now selling at $70 per share.a. What is your maximum possible lossb. What happens to the m
3、aximum loss if you simultaneously place a stop-buy order at $78 2. De Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per share. She borrows $4,000 from her broker to help pay for the purchase. The interest rate on the loan is 8%.a. What is the margin in Des accou
4、nt when she first purchases the stockb. If the price falls to $30 per share by the end of the year, what is the remaining margin in her account If the maintenance margin requirement is 30%, will she receive a margin callc. What is the rate of return on her investment3. Old Economy Traders opened an
5、account to short sell 1,000 shares of Internet Dreams from the previous problem. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $40 to $50, and the stock has paid a dividend of $2 per share.a. What is the remai
6、ning margin in the accountb. If the maintenance margin requirement is 30%, will they receive a margin callc. What is the rate of return on the investment4. Consider the following limit-order book of a specialist. The last trade in the stock took place at a price of $50.a. If a market-buy order for 1
7、00 shares comes in, at what price will it be filledb. At what price would the next market-buy order be filledc. If you were the specialist, would you desire to increase or decrease your inventory of this stock5. Here is some price information on Fincorp stock. Suppose first that Fincorp trades in a
8、dealer market.a. Suppose you have submitted an order to your broker to buy at market. At what price will your trade be executedb. Suppose you have submitted an order to sell at market. At what price will your trade be executedc. Suppose an investor has submitted a limit order to sell at $. What will
9、 happend. Suppose another investor has submitted a limit order to buy at $. What will happen6. Youve borrowed $20,000 on margin to buy shares in Disney, which is now selling at $40 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later,
10、 the stock price falls to $35 per share.a. Will you receive a margin callb. How low can the price of Disney shares fall before you receive a margin call are bearish on Telecom stock and decide to sell short 100 shares at the current market price of $25 per share.a. How much in cash or securities mus
11、t you put into your brokerage account if the brokers initial margin requirement is 50% of the value of the short positionb. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position8. If you place a stop-loss order to sell
12、 100 shares of stock at $55 when the current price is $62, how much will you receive for each share if the price drops below $55a. $50. b. $55. c. $. d. Cannot tell from the information given. wish to sell short 100 shares of XYZ Corporation stock. If the last two transactions were at $ followed by
13、$, you only can sell short on the next transaction at a price ofa. $ or higher. b. $ or higher. c. $ or lower. d. $ or lower.10. Specialists on the New York Stock Exchange do all of the following excepta. Act as dealers for their own accounts. b. Execute limit orders.c. Help provide liquidity to the
14、 marketplace. d. Act as odd-lot dealers. January 1, you sold short one round lot ., 100 shares) of Zenith stock at $14 per share. On March 1, a dividend of $2 per share was paid. On April 1, you covered the short sale by buying the stock at a price of $9 per share. You paid 50 cents per share in com
15、missions for each transaction. What is the value of your account on April 1Chapter 05 are considering the choice between investing $50,000 in a conventional 1-year bank CD offering an interest rate of 7% and a 1-year “Inflation-Plus” CD offering % per year plus the rate of inflation.a. Which is the
16、safer investmentb. Which offers the higher expected returnc. If you expect the rate of inflation to be 3% over the next year, which is the betterinvestment Why2Suppose your expectations regarding the stock market as follows:compute the mean and standard deviation of the HPR on stock. a period of severe inflation, a bond offered a nominal HPR of 8
