Exam 16: Investment and Securities

At the beginning of 2010,Sally purchased Besham stock on margin.The initial margin requirement is 60 percent and the broker loan rate is 10 percent.Sally invested $15,000 of her own funds and margined the maximum amount allowed by the broker to purchase Besham stock.At the time,the purchase price of the stock was $50 a share.No dividends were paid during the year,and the stock was sold for $48 a share at the end of the 2010.What is the one-year holding period return for this investment?

The current yield for a bond is computed by dividing the current interest payment associated with the bond by the current market price of the bond.

Income securities are used primarily to

When an investor places an order to trade stock with his or her broker,as long as the market is open,it is always executed as soon as possible.

You have an arrangement with your brokerage firm that allows you to purchase stock on margin with an initial margin requirement of 25 percent and a broker loan rate of 10 percent.What is the maximum amount of stock you can purchase on margin if you have $20,000 to invest?

The costs associated with trading securities,which include the costs of time,effort,and phone calls,as well as brokered commissions are called

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

When an investor trades on margin,he or she borrows from the broker some of the funds needed to purchase securities.

Once realistic goals have been formulated based on investment objectives and risk attitudes,the costs associated with the selection and purchase of the investment instruments is minimal.

Asset allocation refers to the proportion of funds invested in various categories of assets.

Because the simple arithmetic average return does not consider compounding,its value is always less than or equal to the geometric average return.

The relative amount of personal funds,or initial equity,an investor can borrow from the broker when purchasing stocks on margin is called the initial margin requirement.

-Refer to Portfolio.What was the one-year holding period return for the portfolio in 2011? Assume any dividend payments are included in the market value shown above.

The total value of a firm's stock which can be computed by multiplying the number of shares outstanding by the market price per share is called what?

The total return earned from the time an investment is purchased until it is liquidated is called a(n)____.

An order that gives instructions to cancel the order if the price conditions are not met by the end of the trading day is called a ____ order.

Steve purchased a bond for $975.00.Ninety days later he received interest income of $40.00,and then immediately sold the bond for $990.00.What is the annualized rate of return Steve earned on this investment?

When one investor borrows stock from another investor and then immediately sells it in the market,but with a promise to replace the stock at some later date,he or she has executed a transaction that is called ____.

A stock purchased for $52 paid a dividend of $1 six days after it was purchased.The stock was sold for $51 ninety days after it was purchased.What is the annualized rate of return? Assume the dividend was not reinvested.

An investor earned a 5 percent holding period return on a stock he originally purchased for $50.The stock paid a dividend equal to $3.What was the price of the stock when it was sold?