FIN3102 practice questions (mid-term with answers)
Sample Practice Questions for Test 1 with Answers Semester 2, 2016/2017 Prepared by Dr. Weina Zhang 1. You want to purchase GM stock at $10 from your broker using as little of your own money as possible. If initial margin is 60% and you have $2400 to invest, how many shares can you buy? A. 200 shares B. 300 shares C. 400 shares (answer: 2400/0.6 = $4000; $4000/$10 = 400 shares) D. 600 shares E. 800 shares 2. Assume you sold short 100 shares of common stock at $40 per share. The initial margin is 60%. What would be the maintenance margin if a margin call is made at a stock price of $50? A. 40% B. 20% (answer: equity drops from $2000 to $1000. =$1000/($50*100) = 20%) C. 35% D. 25% E. None of the above. (Use the balance sheet:
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sample practice questions for test 1 with answers semester 2
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20162017 prepared by dr weina zhang 1 you want to purchase gm stock at 10 from your broker using as little of your own money as possi
