Lisa purchased 500 shares of XYZ stock trading at $40 per share, with an initial margin requirement of 60% and a maintenance margin of 30%. At What price would Lisa receive a margin call?
A. $20
B. $22.86
C. $57.14
D. $80.00 - ANSWER B. $22.86
40*(1-.60)/ 1-.30= 22.86
Lareen purchased 1...
Lisa purchased 500 shares of XYZ stock trading at $40 per share, with an initial margin requirement of
60% and a maintenance margin of 30%. At What price would Lisa receive a margin call?
A. $20
B. $22.86
C. $57.14
D. $80.00 - ANSWER B. $22.86
40*(1-.60)/ 1-.30= 22.86
Lareen purchased 1000 shares of CWC stock for $80 per share with an initial margin requirement of 65%
and a maintenance margin of 40%. Assume the stock price falls to $30 per share, how much equity must
Laureen contribute?
A. $2/share
B. $8/share
C. $10/share
D. $12/share - ANSWER C. $10 per a share
Required Equity Actual Equity
Price: 30 Price: 30
Main. Margin *.40 Debt: (28)
, Required Equity 12 Actual: $2
Debt = $80* (1-.65) = $28
Required - Actual = contribution amount 12-2=10
He is subject to anchoring. His belief is a stock that falls 10% for its high is likely to return to that high. He
is fixated on that high price.
Kevin has subscribed to various investment magazines and data resources, which he religiously reads and
analyzes. Kevin utilizes this analysis to make shifts in his high beta portfolio on a daily basis. Which
behavioral finance bias is Kevin subject to?
A. Hindsight Bias
B. Overconfidence
C. Regret Avoidance
D. Herd Mentality - ANSWER B. Overconfidence
This is a classic example of overconfidence. Kevin believes that his information is perfect, that his analysis
is perfect, so he trades too often and has a very risky portfolio (high beta).
Which of the following would you use to ascertain the chairman's perspective for progress completed
and expected for the coming year?
A. 10K report.
B. Annual report.
C. 10Q report.
D. Quarterly report - ANSWER B. Annual Report
You own 1,000 shares of ePlace stock. You purchased these shares for $25 per share on margin with a
%50 initial margin requirement and a 25% maintenance margin requirement. ePlace has experienced
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