Exam 2: The Investment Process

The short interest on Blue Water Cruisers stock was 351,900 when the market opened this morning.During the day,288,500 shares were covered and 151,600 shares were sold short.What was the short interest on this stock at the end of the trading day?

Alfonso purchased 600 shares of Crosswinds,Inc.,stock on 60% margin when the stock was selling for $37 a share.The stock is currently selling for $32 a share.What is his current equity position?

What is the purpose of a margin call?

Amy just purchased $12,000 of stock.She paid $9,000 in cash and borrowed the remaining $3,000 needed to pay for this purchase.If you constructed a balance sheet reflecting this transaction,the total assets would be:

Recently,you sold 1,000 shares of stock for $21,400.The sale was a short sale with an initial margin requirement of 60 percent.The maintenance margin is 30 percent.The stock is currently trading at $27.50 a share.What is your current margin position in this stock?

The absolute minimum initial margin requirement is set by the:

A company that owns income-producing real estate such as an apartment complex or a retail shopping center is called a(n):

Today,you short sold 1,100 shares of Jasper Industrial stock at $48 a share.The initial margin is 60 percent and the maintenance margin is 30 percent.Which one of the following is correct concerning your account balance sheet for this transaction?

Stuart purchased 300 shares of Microsoft stock which he has pledged to his broker as collateral for the loan in his margin account.This process of pledging securities is called:

Lauren Mitchell has a margin account with a local brokerage firm,RL Brokers.She recently purchased 200 shares of Abbot Industries common stock that trades on the New York Stock Exchange (NYSE).These shares are held in street name and are registered under the name of:

You purchased 1,000 shares of stock at $42 a share.The stock is currently selling for $45 a share.The initial margin was 70 percent and the maintenance margin is 30 percent.What is your current margin position?

Todd has a margin account with $17,400 in available cash.The initial margin is 70 percent and the maintenance margin is 30 percent.What is the maximum number of shares he can purchase if the price per share is $44?

Sarah has a brokerage account with Jeff,who is a money manager with Downtown Brokers.Sarah pays an all-inclusive annual fee to the firm and Jeff manages her funds.She pays no trading costs or commissions.Which one of the following best describes this type of account?

To be considered liquid,a security must:

Asset allocation is the:

Ted recently inherited a large sum of money that he wants to invest in the stock market.Since he has no investment experience,he has decided that he would like to work with a professional who can explain the market to him and also manage his funds for him.Ted most likely needs the services offered by a(n):

Staci owns 1,000 shares of stock in a margin account.Those shares are most likely held in:

Recently,you sold 500 shares of stock for $16.60 a share.The sale was a short sale with an initial margin requirement of 70 percent.The maintenance margin is 35 percent.The stock is currently trading at $17.80 a share.What is your current short position in this stock?

Allan purchased 800 shares of stock on margin for $31 a share and sold the shares five months later for $33.50 a share.The initial margin requirement was 65 percent and the maintenance margin was 30 percent.The interest rate on the margin loan was 7.5 percent.He received no dividend income.What was his holding period return?

Matt short sold 500 shares of Tall Pines stock at $19 a share at an initial margin of 65 percent. The maintenance margin is 35 percent.What is the highest the stock price can go before he receives a margin call?