Question

9. A customer sells short 100 shares of XYZ at $50 per share. The credit balance in the customer's

account after the customer deposits the required margin is:

a. $2,500

b. $5,000

c. $7,500

d. $10,000

10. How many semi-annual periods would it take for a $2,000 deposit to grow to $6,798 at 12%

compounded semi-annually?

a. 17

b. 19

c. 21

d. 25

e. none of the above

11. Charlie Stone wants to retire in 35 years (he is currently 22) and be able to withdraw $250,000

per year for 15 years. Charlie wants to receive the first payment at the end of the 35th year. Using

an annual interest rate of 10%, how much should Charlie deposit at the end of each of the 35 years

in order to achieve his goal?

a. $5,245.67

b. $10,765.32

c. $26,899.41

d. $7,717.63

e. none of the above

Answer #1

9). Credit balance = proceeds of sale + margin required on the sale

= (100*50) + 50%*(100*50) = 7,500 (Option C) (Assuming a margin requirement of 50% since margin is not given in the question)

10). Let the number of semi-annual periods be n. Then,

future value = amount*(1+ semi-annual interest rate)^n

6,798 = 2,000*(1+6%)^n

n = ln(6,798/2,000)/ln(1+6%) = 20.98 or 21 periods (Option C)

11). Amount required at the end of 35 years: PMT = 250,000; N = 15; rate = 10%, solve for PV.

PV = 1,901,519.88

Amount required to be invested p.a. for 35 years: FV = 1,901,519.88; N = 35; rate = 10%, solve for PMT

Annual investment = 7,016.05 (Option E)

XYZ has one share of stock and one bond. The total value of the
two securities is $1,100. The bond has a YTM of 16.20 percent, a
coupon rate of 9.60 percent, and a face value of $1,000; pays
semi-annual coupons with the next one expected in 6 months, and
matures in 3 years. The stock pays annual dividends that are
expected to be $12.40 and paid in one year. What is the expected
return for the stock?
a) 9.83%...

4. An investor purchases 100 shares of xyz stock at 67
and 1/2 and writes an at-the-money call for a total premium of $3
75. Margin requirements are at 50%. What is the net cash deposit
that is required in his margin account?
a. 3,000
b. 2,000
c. 2?187.50
d. 3,375
e. none of the
above
5. The maximum gain on a long put occurs when the stock
price at expiration is
a. infinite
b. equal to the
exercise price...

33)Rhianna purchased 1,500 shares of XYZ
Corporation for $15,000. This year, XYZ Corp. declared a 10%
nontaxable stock dividend, and Rhianna received 150 shares. After
the dividend Rhianna's per share basis will be (rounded)
A) $6.00.
B) $7.57.
C) $9.09.
D) $10.00.
35)In addition to Social Security benefits of
$10,000, Mr. and Mrs. Kuklowski have adjusted gross income of
$40,000 and tax-exempt interest of $2,500. They will file a joint
return. The taxable portion of their Social Security benefits will...

8. You want to buy a new sports car from Muscle Motors for
$68,000. The contract is in the form of a 60-month annuity due at a
7.85 percent annually. What will your monthly payment be? *
a. $1,736.22
b. $1255.29
c. $1450.87
d. $1,373.92
e. None of the above
9. Your uncle has $375,000 and wants to retire. He expects to
live for another 25 years and to earn 7.5% on his invested funds.
How much could he withdraw...

Bond A and bond B both pay annual coupons, mature in 9 years,
have a face value of $1000, pay their next coupon in 12 months, and
have the same yield-to-maturity. Bond A has a coupon rate of 6.5
percent and is priced at $1,055.13. Bond B has a coupon rate of 7.4
percent. What is the price of bond B?
a.
$1,117.15 (plus or minus $4)
b.
$995.40 (plus or minus $4)
c.
$1,055.13 (plus or minus $4)
d....

3. You purchased 100 shares of JNJ stock at $50 per share. The
stock is currently selling at $45. You would like to lock up your
total loss to no more than $700. Which of the following action will
help you?
OPTIONS;
A. place a stop-buy order at $57
B. place a stop-loss order at $43
C. place a limit buy order at $53
D. place a limit sell order at $47
E. none of the above
4.
Which of...

31. ABC is expected to pay a
dividend per share of $2.20 next year. Dividends are expected to
grow by 5% forever. What is the required rate if the current stock
price is $50?
A 2.11%
B 4.21%
C 5.01%
D 9.14%
E None of
the above
32 What is the fair
value of a business that promises a $14,000 cash flow every year
for the next 5 years, assuming a 12% required rate?
A $50,266.87
B $50.466.87
C $60,666.87...

You start your own company and issue 100% of the 800,000 shares
of stock to yourself with a par value of $0.06 per share, and 35
years later you sell your company for $11.45 per share. How much
money do you have?
a. $11.45
b. $2,113,487
c. $9,160,000
d. $14,235,982
e. None
If you can get an annual rate of 5% earnings on your
investments, and you are the company owner from the question above.
How much money will you...

1. A Treasury bond has a 10% annual coupon and a 10.5%
yield to maturity. Which of the following statements is CORRECT?
*
a. The bond sells at a price below par.
b. The bond has a current yield less than 10%.
c. The bond sells at a discount.
d. a & c.
e. None of the above
2. J&J Company's bonds mature in 10 years, have a par value of
$1,000, and make an annual coupon interest payment of...

XYZ Corp, STOCKHOLDERS’ EQUITY SECTION OF BALANCE SHEET
(amounts in thousands, except per share amounts)
Dec.31,
Y8
Dec 31,
Y7
Stockholders’ equity:
Preferred stock, $0.15 par value; 20,000
shares authorized;
12,200 shares issued
and outstanding in Y8 and Y7·············
$1,830
$1,830
Common stock, $0.15 par value; Authorized
800,000 shares;
Issued: 357,700
shares in Y8 and Y7···································
53,655
53,655
Additional paid-in
capital·························································
273,710
195,810
Retained
earnings··································································
1,576,545
1,305,366
Accumulated other comprehensive income
(loss)·····················
(3,950)...

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