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Unformatted text preview: o 50% of the current market value of the
shares. Therefore, they are able to enter into a larger transaction then they would be
able to with a straight market order, and have the potential to earn a larger return. Problem 4
a) Stock HAR b) Stock RON Raising Marks. Raising Money. Raising Roofs.
www.schoolsos.com Students Offering Support: Wilfrid Laurier University
c) Stock HRM Problem 5
a) What is your capital gain or loss? ( ) b) If the price decreased to $15 before you sold your shares, what would be the amount of
the margin call?
( ) Problem 6
( ) Raising Marks. Raising Money. Raising Roofs.
www.schoolsos.com Students Offering Support: Wilfrid Laurier University Problem 7 [
( ( ) ) Note that the bond is priced at a premium (price is higher than face value) since the
coupon rate is higher than market interest rate Problem 8
a) For bonds sold at premium: Market Rate < Coupon Rate
b) For bonds sold at par:
Market Rate = Coupon Rate
c) For bonds sold at discount: Market Rate > Coupon Rate Problem 9
( ) )
) ( )
( [ )] ( ) ) ) ( (
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- Fall '08