Question

Question 5 What is better 1% monthly interest, 3.1% interest quarterly, 6.2% interest semi-annually, or 12.6% annual interest. A. 6.2% semi-annual B. 3.1% quarterly C. 12.6% annual D. 1% monthly E. They are all the same

Question 6 You decide to buy 1200 shares of stock at a price of $34 and an initial margin of 60%. What is the maximum decline in share price before you receive a margin call. Assume that the maintenance margin is 30%. A. -42.86% B. -30.77% C. -35.67% D. -25%

Question 7 A stock has returns of -9%, 10%, 9%, 14%, -14%. What are the arithmetic and geometric average return and the standard deviation? A. 2%, 1.36%, 15.68% B. 1.36%, 2%,12.59% C. 10%, 12%, 12.59% D. 2%,1.36%, 12.59%

Question 8 You invested $10,000 in a mutual fund at the beginning of the year when the NAV $32.24. At the end of the year the fund paid $.24 in short term distributions and $0.41 in long term distributions. If the NAV at the end of the year was $35.32 what was your return for the year? A. 11.57% B. 10.57% C. 11.29% D. 10.29%

Answer 1

Note: We’ll answer the first question since the exact one wasn’t specified, as per policy.

The question is based on the concept of effective interest rate calculation ,

Case A: 1% monthly interest,

=12.68%

Case B : 3.1% interest quarterly,

=12.99%

Case C: 6.2% interest semi-annually,

=12.78%

Case D: 12.6% annual interest

=12.6%

from above calculation , Case B has the heighest Interest rate of 12.99%

Answer : Option B. 3.1% quarterly