Question

You want to purchase $50,000 worth of Y stock which is currently trading at $17 per share, using your margin account. If the initial margin is 45% and maintenance margin is 30%, at what price will you receive a margin call (1 point)?

• $13.1
• $15.9
• $10.9
• $11.9

You purchased 10,000 shares of Y stock at $55 per share on margin. Assume that initial margin is 50% and margin interest rate is 7%. If you sell the shares a year later for $67 per share, calculate your return using margin (1 point):

• 50.0%
• 36.6%
• 21.8%
• 43.6%

Spotify went public on April 3, 2018 on NYSE through a direct listing procedure, rather than a standard IPO. In direct listing a stock starts trading on an exchange without a formal offering. IPO price is determined by buy and sell orders submitted by market participants before the first day. Some of direct listing advantages include lower costs of going public (no underwriters) and process transparency which is good for both buyers and seller of stock. Please discuss disadvantages of going public through a direct listing (4 points).

In order for you to be indifferent between the after-tax returns on a corporate bond paying 8.5% and a tax-exempt municipal bond paying 6.12%, what would your tax bracket need to be? (1 point)

• 33%
• 24%
• 28%
• 15%

Consider a 4.0% coupon seven year T-note with a par of $1,000 which pays interest semiannually. The maximum number of STRIPS this T-note could be stripped into is _____ (1 point):

• 8
• 7
• 11

Answer 1