Exam 16: Investment and Securities

Because an investor borrowing funds for margin trading pays a fixed rate to borrow funds from his broker,the margin trading returns are magnifies the returns on the assets value.

Use the information below to solve for the earnings per share for Landstar.

There are a number of different stock market indexes that differ primarily because they include different combinations of stocks;but,the computation for each index is essentially the same.

Foxy Ladies Investment Club The Foxy Ladies Investment Club purchased 100 shares of common stock each in Coca-Cola, Intel, and Merck on January 02, 2010. A summary of their portfolio is given below: -Refer to Foxy Ladies Investment Club.What was the portfolio's simple arithmetic average return per year from 2010 through 2012?

The hypothecation agreement,which is the legal document an investor signs when he or she trades stock on margin,includes the maximum amount by which the price of the stock can increase before the amount borrowed from the broker must be repaid.

To determine the weighted average returns of stocks held in a portfolio,the weights are determined as the fraction

The Securities Investor Protection Corporation insures the cash and securities held by the brokerage company from theft or loss of the security.Each investor is covered to a maximum of ____.

An investor who short sells a stock will receive a margin call if the price of the stock decreases substantially.

Use the information below to solve for the dividend yield for Midas.

Because the computations for different market indexes are essentially the same,it really doesn't matter which index is used to determine how the performance of your investment portfolio compares to the market.

The simple arithmetic average return for the common stock of Saltwater Expeditions Incorporated for the eight-year period from 2005 through 2012 was 21 percent.The one-year holding period returns from 2005 through 2011 are given below.What is the implied one-year holding period return for 2012?

Your brokerage firm allows market trading with an initial margin requirement equal to 60 percent plus an 8 percent broker loan rate.You have $6,000 to invest.How many shares of ABC can you purchase on margin? ABC stock currently sells for $50 a share.

An order that specifies the price at which a market order is initiated is called a ____ order.

When the market is rising,it is called a bull market.

When the market is rising we call it a ____ market,which suggests the economy is performing well;when the market is falling we call it a ____ market,which suggests the economy is performing poorly.

An investor who trades on margin generally will receive a margin call when the stock price increases significantly because the broker needs to determine whether the investor wants to liquidate the position to take advantage of the profits that are available.

-Refer to Portfolio.What was the one-year holding period return for the portfolio in 2009? Assume any dividend payments are included in the market value shown above.

Which of the following is not a common reason given for investing?

An investor purchased a share of AutheTec stock (AUTH)for $12.50.Three months later the stock was sold for $14.25.What is the holding period return earned by the investor?

To be broker or to trade securities you must