Blog

In practice except for when price-weighting, when we construct an index, we should set the index level to:

Suppose that you just short sold 100 shares of ABC stock for $50 per share. The initial margin requirement is 60%, which you cover by pledging T-bills as collateral. If the price of the stock falls to $41 per share, what return did you earn? Ignore the interest earned on T-bills.

You bought 40 shares of a $60 stock on margin one year ago. Today, the stock is worth $73 per share. You initially posted 75% margin. Ignoring any interest due and margin calls, calculate your rate of return.

A research analyst at an index fund company pulled the following price data on the stocks of ABC, DEF, and GHI. The index fund company is considering building a price-weighted index of the three stocks. Stock Price Information Stock Price Time 0 Time 1 ABC $10.00 $15.75 DEF $20.00 $15.75 GHI $30.00 $31.25   During this period, what was the percent change in the level of the index?

Stock ABC is currently selling for $55 per share. Which of the following should have a higher selling price? a three-month call option on ABC stock with an exercise price $50 a three-month put option on ABC stock with an exercise price $50

Please upload your Excel workbook with your work. This will help if we have to add points back later! Make sure to save it before uploading.

Challenge The national order book for shares of ABC Corp. is: National Order Book Asks /Limit Sell Orders       Price Shares Dealer Ask $99 3,600   $98 900   $97 720   $96 180 Best Ask $95 72         Bids /Limit Buy Orders   Price Shares Best Bid $93 15   $92 38   $91 150   $90 188 Dealer Bid $89 750       Suppose a market order to sell 300 shares arrives from a fund manager. At what weighted-average price will this order be filled? (note: this spreads are unrealistically large. In reality, they would be $0.01) Enter your answer as a number of dollars, rounded to the nearest $0.01.

Which of the following best defines a stock market index, such as the S&P 500?

You bought 35 shares of a $65 stock on margin one year ago. Today, the stock is worth $75 per share. You initially posted 75% margin. Ignoring any interest due and margin calls, calculate your rate of return.

Stock ABC is currently selling for $50 per share. Which of the following should have a higher selling price? a three-month call option on ABC stock with an exercise price $45 a three-month put option on ABC stock with an exercise price $45