Econ 136- first MT-Sp 2010

Econ 136- first MT-Sp 2010 - UNIVERSITY OF CALIFORNIA,...

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UNIVERSITY OF CALIFORNIA, BERKELEY Department of Economics Course: Econ. 136 – Financial Economics Exam: First mid-term – spring 2010 Professor: Hamid Shomali Please answer all questions. Each question has 5 points. 1. The price quotations of Treasury bonds in the Wall Street Journal show an ask price of 104:08 and a bid price of 104:04. As a buyer of the bond what is the dollar price you expect to pay? A. $1,048.00 B. $1,042.50 C. $1,044.00 D. $1,041.25 E. $1040.40 2. An investor purchases one municipal and one corporate bond that pay rates of return of 8% and 10%, respectively. If the investor is in the 20% marginal tax bracket, his or her after tax rates of return on the municipal and corporate bonds would be ________ and ______, respectively. A. 8% and 10% B. 8% and 8% C. 6.4% and 8% D. 6.4% and 10% E. 10% and 10% 3. Which of the following securities is a money market instrument? A. Treasury note B. Treasury bond. C. municipal bond. D. commercial paper. E. mortgage security.
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4. Assume you purchased 200 shares of GE common stock on margin at $70 per share from your broker. If the initial margin is 55%, how much did you borrow from the broker? A. $6,000 B. $4,000 C. $7,700 D. $7,000 E. $6,300 5. You purchased 100 shares of common stock on margin at $45 per share. Assume the initial margin is 50% and the stock pays no dividend. What would the maintenance margin be if a margin call is made at a stock price of $30? Ignore interest on margin. A. 0.33
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Econ 136- first MT-Sp 2010 - UNIVERSITY OF CALIFORNIA,...

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