IPM_Quiz1(b)_Solution

IPM_Quiz1(b)_Solution - BUS 415: INVESTMENT AND PORTFOLIO...

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BUS 415: INVESTMENT AND PORTFOLIO MANAGEMENT SPRING 2011, AUBG Quiz 1(b) 1. If you place a stop-loss order to sell 100 shares of stock at $55 when the current price is $62, how much will you receive for each share if the price drops to $50? A. $50 B. $55 C. $54.87 D. Cannot tell from the information given Answer B. The broker will sell at current market price, after the first transaction at $55 or less. 2. You wish to sell short 100 shares of XYZ Corporation stock. If the last two transactions were at $34.12 followed by $34.25, you can sell short on the next transaction only at a price of: A. $34.12 or higher B. $34.25 or higher C. $34.25 or lower D. $34.12 or lower Answer B. 3. If you buy 100 shares at $20 per share with 50% margin, the cash you must put in your brokerage account is _______________. A. $2,000 B. $1,500 C. $1,000 D. $500 Answer: C 50% = (100*20 – L) / (100*20) Liability =1000 Initial Cash outlay = 1000 4. If you originally bought 100 shares at $20 per share with 50% margin, and the price of the
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IPM_Quiz1(b)_Solution - BUS 415: INVESTMENT AND PORTFOLIO...

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