# FINANCE-You sell short 100 shares of Merck at \$30 per share

Question
You sell short 100 shares of Merck at \$30 per share. One week following your short sale, Merck announces it has found the cure for cancer and its stock price increases to \$750 per share.If you choose to cover your short position when the price is \$750, what is your total gain or loss (-)?

You sell short 100 shares of Merck at \$30 per share. One week following your short sale, Merck announces it has found the cure for cancer and its stock price increases to \$750 per share.Assume you placed a stop buy order at \$100 when you sold short. Assume the stop buy order executed at \$100. What is your total gain or loss (-)?

You open a brokerage account and purchase 200 shares of Google at \$443.05 per share.You borrow 40% from your broker to help pay for the purchase.The interest rate on the loan is 8%.What is the initial loan amount in your account?

You open a brokerage account and purchase 200 shares of Google at \$443.05 per share.You borrow 40% from your broker to help pay for the purchase.The interest rate on the loan is 8%.Assume the day after your stock purchase, Google announces abysmal quarterly earnings.If the maintenance margin requirement is 30%, at what share price will you receive a margin call?

You open a brokerage account and purchase 200 shares of Google at \$443.05 per share. You borrow 40% from your broker to help pay for the purchase. The interest rate on the loan is 8%. One year after purchase, Google’s price is \$320. What is your new margin balance? (Include interest expense in your calculation.)

You open a brokerage account and purchase 200 shares of Google at \$443.05 per share. You borrow 40% from your broker to help pay for the purchase. The interest rate on the loan is 8%. One year after purchase, Google’s price is \$320, assume you sell your stock one year after purchase. What is your rate of return?

You open a brokerage account on January 1 and sell short 500 shares of Apple Computer at \$163.39 per share. The initial margin requirement is 50%. The maintenance margin is 30%. Disregarding interest and dividends, at what stock price will you receive a margin call?

You open a brokerage account on January 1 and sell short 500 shares of Apple Computer at \$163.39 per share. The initial margin requirement is 50%.

Assume that Apple pays an annual dividend on December 31 of \$5.50 per share. What is the margin balance on December 31 after the dividend has been paid if the price of the stock is \$140 per share? There is no interest paid in this margin account.

You open a brokerage account on January 1 and sell short 500 shares of Apple Computer at \$163.39 per share. The initial margin requirement is 50%.

Assume that Apple pays an annual dividend on December 31 of \$5.50 per share, the price of the stock is now \$140 per share, assume you cover your short position on December 31. What is your rate of return? There is no interest paid in this margin account.

If the offering price of an open end fund is \$14.30 per share and the fund is sold with a front-end load of 3.5%, what is its net asset value?

The Closed Fund is a closed-end fund with a portfolio currently worth \$240 million. It has liabilities of \$3 million and 9 million shares outstanding.

If the fund sells for \$25.50 per share, what is the premium or discount (-) as a percent of NAV?

A closed-end fund starts the year with an NAV of \$11.00. By year end, NAV equals \$11.25. At the beginning of the year, the fund is selling at a 2% premium to NAV. By the end of the year, the fund is selling at a 4% discount to NAV. The fund paid year-end distributions of income and capital gains of \$1.40.

What is the rate of return to an investor in the fund during the year?

Big Blue Mutual Fund has \$240 million in assets at the start of the year and 10 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of \$3 million. The stocks in the fund’s portfolio increase in price by 8%, but no securities are sold so there are no capital gains distributions. The fund charges 12b-1 fees of 1%, which are deducted from portfolio assets at year end.

What is the NAV at the end of the year?

Big Blue Mutual Fund has \$240 million in assets at the start of the year and 10 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of \$3 million. The stocks in the fund’s portfolio increase in price by 8%, but no securities are sold so there are no capital gains distributions. The fund charges 12b-1 fees of 1%, which are deducted from portfolio assets at year end.

What is the rate of return for an investor in the fund?

You are considering an investment in a mutual fund with a 4% front-end load and an expense ratio of 0.65%. You can invest instead in a bank CD paying 6% interest.

If you plan to invest for two years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns.

You are considering an investment in a mutual fund with a 4%front-endload and an expense ratio of 0.65%. You can invest instead in a bank CD paying 6% interest.

If you plan to invest for six years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns.

You are considering an investment in a mutual fund with a 4%front-end load and an expense ratio of 0.65%. You can invest instead in a bank CD paying 6% interest.

Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of 0.90% per year. What annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD?