5513 FINS investment and portfolio selection 2012 past paper

This is a closed-book exam. You must remain in the room when you write your examination. You may not refer to any books, notes, or other material, but you may use a calculator (but not a

“programmable” one). Look over the entire exam before you start. There is a total of 105 points

(+ 6 bonus points)

1.Firms that specialize in helping companies raise capital by selling securities are called

________.

A) commercial banks

B) investment banks

C) savings banks

D) credit unions

E) all of the above.

2.Commercial paper is a short-term security issued by ________ to raise funds.

A) the Federal Reserve Bank

B) commercial banks

C) large, well-known companies

D) the New
*…show more content…*

8.You purchased 100 shares of ABC common stock on margin at $70 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. A) $21

B) $50

C) $49

D) $80

E) none of the above

9.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.

A) 25%

B) -33%

C) 44%

D) -42%

E) –54%

10. Assume you sold short 100 shares of common stock at $50 per share. The initial margin is 60%. What would be the maintenance margin if a margin call is made at a stock price of $60?

A) 40%

B) 33%

C) 35%

D) 25%

E) none of the above

11. You sell short 100 shares of Loser Co. at a market price of $45 per share. Your maximum possible loss is

A) $4500

B) unlimited

C) zero

D) $9000

E) cannot tell from the information given

12. Pinnacle Fund had year-end assets of $825,000,000 and liabilities of $25,000,000. If

Pinnacle 's NAV was $32.18, how many shares must have been held in the fund?

A) 21,619,346,92

B) 22,930,546.28

C) 24,860,161.59

D) 25,693,645.25

E) None of the above.

13. Management fees and other expenses of mutual funds may include

3

A) front-end loads.

B) back-end loads.

C) 12b-1 charges.

D) A and B only.

E) A, B and C.

14. The Yachtsman Fund had

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