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1 | |
Cash held in a brokerage account is insured up to $100,000 by the FDIC. |
| | A) | True |
| | B) | False |
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2 | |
Hypothecation is the pledging of securities as collateral for a loan. |
| | A) | True |
| | B) | False |
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3 | |
You short sold $5,000 worth of stock. Your maximum loss is $5,000. |
| | A) | True |
| | B) | False |
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4 | |
Online brokers: |
| | A) | became popular in the mid-1980's. |
| | B) | have effectively lowered the cost of trading. |
| | C) | place orders on your behalf. |
| | D) | face minimal competition. |
| | E) | never offer check-writing privileges or debit cards. |
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5 | |
You open a brokerage account with $10,000 in cash. Subsequently, you purchase 1,000 shares of a stock at $16 a share on margin. Which one of the following account values is correct concerning your account position after the stock purchase? |
| | A) | margin loan of $10,000 |
| | B) | total assets of $26,000 |
| | C) | account equity of $10,000 |
| | D) | total assets of $10,000 |
| | E) | account equity of $6,000 |
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6 | |
You just opened a brokerage account and deposited the amount required to purchase 300 shares of stock on margin. Your account balance sheet after the purchase shows a margin loan of $2,880 and account equity of $11,520. What was the initial margin requirement? |
| | A) | 20 percent |
| | B) | 25 percent |
| | C) | 60 percent |
| | D) | 75 percent |
| | E) | 80 percent |
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7 | |
The maximum maintenance margin that your broker might require on stock purchases is _____ percent. |
| | A) | 60 |
| | B) | 70 |
| | C) | 80 |
| | D) | 90 |
| | E) | 100 |
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8 | |
You own 300 shares of stock which dropped drastically in value today down to $13.50 a share. You have a margin loan of $2,880. What is the amount of your margin call if the maintenance margin is 40 percent? |
| | A) | $0 |
| | B) | $450 |
| | C) | $950 |
| | D) | $1,260 |
| | E) | $3,150 |
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9 | |
You purchased a stock nine months ago at a price of $32.60. The stock pays a quarterly dividend of $.48. Today, you sold the stock for $34.10. What was your holding period? |
| | A) | 3 months |
| | B) | 6 months |
| | C) | 9 months |
| | D) | 12 months |
| | E) | 15 months |
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10 | |
Jonathan owned a bond for 3 months and realized a holding period return of 4.5 percent. Hallie owned a similar bond for 4 months and had a holding period return of 4.5 percent. Jonathan earned an effective annual rate of _____ percent and Hallie earned an effective annual rate of _____ percent. |
| | A) | 16.50; 12.25 |
| | B) | 17.56; 13.13 |
| | C) | 18.00; 13.50 |
| | D) | 18.67; 13.87 |
| | E) | 19.25; 14.12 |
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