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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