Question

1.An investor purchased 500 shares of Akley common stock for $42,000 in a margin account and posted initial margin of 50%. The maintenance margin requirement is 30%. The price of Akley, below which the investor would get a margin call, is closet to:

a. 50 b. 55 c. 65 d. 60

2.Active management:

a. can outperform a passive strategy if markets are semi-strong form efficient b. can outperform a passive strategy if markets are strong-work efficient. c. cannot outperform a passive strategy if markets are semi-strong form efficient d. cannot outperform a passive strategy if markets are weak form efficient

3.According to the capital asset pricing model,

a.Beta is the slope of security market line b.a stock with high risk, measured as standard deviation of returns, will have high expected returns in equilibrium c.all the investor who take on risk will hold the same risky-asset portfolio d.an investor who is risk averse should hold at least some of the risk-free asset in his portfolio

4.The risk-free rate is 6%, and the expected market return is 15%. A stock with a beta of 1.2 is selling for $25 and will pay a $1 dividend at the end of the year. If the stock is priced at $30 at year-end, it is:

a.under-priced, so buy it b.over-priced,so buy it c.under-priced, so short it d.over-priced,so short it