1.Assume 100 shares purchased at $75/share with an initial margin of 50 percent.

The initial cost to the investor is:

A)   $0.

B)   $3,750.

C)   $7,500.

D)   $15,000.

2.Now, assume that the stock rose to $112.50. The return on investment to the investor is:

A)   50%.

B)   200%.

C)   75%.

D)   100%.

3.An investor purchases 200 shares of Merxx on margin. The shares are trading at $40. Initial and maintenance margins are 50 percent and 25 percent.

If the investor sells the stock when the price rises to $50 at year-end, the return on the investment would be closest to:

A)   50.00%.

B)   18.75%.

C)   25.00%.

D)   38.75%.

4.If the company pays a dividend of $0.75, the return on the investment would be closest to:

A)   15.75%.

B)   22.00%.

C)   39.55%.

D)   53.75%.

5.Using the following assumptions, calculate the rate of return on a margin transaction for an investor who purchases the stock and the stock price at which the investor who shorts the stock will receive a margin call.

 Market Price Per Share: $32

 Number of Shares Purchased: 1,000

 Holding Period: 1 year

 Ending Share Price: $34

 Initial Margin Requirement: 40%

 Maintenance margin: 25%

 Transaction and borrowing costs: $0

 The company pays no dividends

What of the following choices is closest to the correct answer?

A)                                        15.6%    $17.07

B)                                        6.3%     $35.80

C)                                        6.3%     $17.07

D)                                        15.6%    $35.80

答案和详解如下：

1.Assume 100 shares purchased at $75/share with an initial margin of 50 percent.

The initial cost to the investor is:

A)   $0.

B)   $3,750.

C)   $7,500.

D)   $15,000.

The correct answer was B)

$75/share × 100 shares = $7,500

50% margin means investor only pays ½ of the $7,500

= $3,750.

2.Now, assume that the stock rose to $112.50. The return on investment to the investor is:

A)   50%.

B)   200%.

C)   75%.

D)   100%.

The correct answer was D)

(market value-initial own investment - margin loan repayment)/initial equity=($11,250 – $3,750 - $3,750) / $3,750 = 100%. (Assuming no interest on the call loan and no transactions fees.)

3.An investor purchases 200 shares of Merxx on margin. The shares are trading at $40. Initial and maintenance margins are 50 percent and 25 percent.

If the investor sells the stock when the price rises to $50 at year-end, the return on the investment would be closest to:

A)   50.00%.

B)   18.75%.

C)   25.00%.

D)   38.75%.

The correct answer was A)

Profit = 10,000 – 8,000 = 2,000
Return = 2,000/4,000 = 50%

4.If the company pays a dividend of $0.75, the return on the investment would be closest to:

A)   15.75%.

B)   22.00%.

C)   39.55%.

D)   53.75%.

The correct answer was D)

Dividends income = (0.75) × (200) = $150
Profit = 10,000 – 8,000 + 150 = 2,150
Return = 2,150 / 4,000 = 53.75%

5.Using the following assumptions, calculate the rate of return on a margin transaction for an investor who purchases the stock and the stock price at which the investor who shorts the stock will receive a margin call.

 Market Price Per Share: $32

 Number of Shares Purchased: 1,000

 Holding Period: 1 year

 Ending Share Price: $34

 Initial Margin Requirement: 40%

 Maintenance margin: 25%

 Transaction and borrowing costs: $0

 The company pays no dividends

What of the following choices is closest to the correct answer?

Margin Return

Margin Call Price

A)                                        15.6%    $17.07

B)                                        6.3%     $35.80

C)                                        6.3%     $17.07

D)                                        15.6%    $35.80

The correct answer was D)

Part 1: Calculate Margin Return:
Margin Return %

= [((Ending Value – Loan Payoff) / Beginning Equity Position) – 1] * 100
= [(([$34 * 1,000] – [$32 * 1,000 * 0.60]) / ($32 * 0.40 * 1,000)) – 1] * 100
= 15.6%

Alternative (Check): Calculate the all cash return and multiply by the margin leverage factor.
= [(34,000 – 32,000)/32,000] * [1 / 0.40] = 6.35% * 2.5 = 15.6%

Part 2: Calculate Margin Call Price:

Since the investor is short (sold the stock), the formula for the margin call price is:
Margin Call = (original price) * (1 + initial margin) / (1 + maintenance margin) = $32 * (1 + 0.40) / (1 + 0.25) = approximately $35.80