Exam 3: How Securities Are Traded

You purchased 1000 shares of CSCO common stock on margin at $19 per share.Assume the initial margin is 50%, and the maintenance margin is 30%.Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin.

Which of the following orders instructs the broker to buy at the current market price?

You purchased 300 shares of common stock on margin for $60 per share.The initial margin is 60%, and the stock pays no dividend.What would your rate of return be if you sell the stock at $45 per share? Ignore interest on margin.

You buy 300 shares of Qualitycorp for $30 per share and deposit initial margin of 50%.The next day, Qualitycorp's price drops to $25 per share.What is your actual margin?

An explicit trading cost is

You purchased 1,000 shares of common stock on margin at $30 per share.Assume the initial margin is 50%, and the stock pays no dividend.What would the maintenance margin be if a margin call is made at a stock price of $24? Ignore interest on margin.

All of the following are considered new trading strategies, except

You purchased 100 shares of common stock on margin at $40 per share.Assume the initial margin is 50%, and the stock pays no dividend.What would the maintenance margin be if a margin call is made at a stock price of $25? Ignore interest on margin.

Which of the following orders is most useful to short sellers who want to limit their potential losses?

You purchased 100 shares of common stock on margin at $45 per share.Assume the initial margin is 50%, and the stock pays no dividend.What would the maintenance margin be if a margin call is made at a stock price of $30? Ignore interest on margin.

Which of the following is not required under the CFA Institute Standards of Professional Conduct?

You sold short 200 shares of common stock at $60 per share.The initial margin is 60%.Your initial investment was

When stocks are held in street name,

You want to purchase XON stock at $60 from your broker using as little of your own money as possible.If initial margin is 50% and you have $3,000 to invest, how many shares can you buy?

Shares for short transactions

You purchased 100 shares of common stock on margin for $35 per share.The initial margin is 50%, and the stock pays no dividend.What would your rate of return be if you sell the stock at $42 per share? Ignore interest on margin.

The cost of buying and selling a stock consists of

You sold short 100 shares of common stock at $45 per share.The initial margin is 50%.At what stock price would you receive a margin call if the maintenance margin is 35%?

Firms raise capital by issuing stock

One outcome from the SEC investigation of the "Flash Crash of 2010" was