Liberty University BUSI 420 Quiz 1 Investments Process and Security Types answers
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Suppose you purchased 2,600 shares in the New Pacific Growth
Fund on January 2, 2022, at an offering price of $41.60 per share.
The front-end load for this fund is 5 percent, and the back-end
load for redemptions within one year is 2 percent. The underlying
assets in this mutual fund appreciate (including reinvested
dividends) by 6 percent during 2022, and you sell back your
shares at the end of the year. If the operating expense ratio for
the New Pacific Growth Fund is 1.89 percent, what is your total
return from this investment?2(Assume that the operating expense
is netted against the fund’s return.)
Note: A negative value should be indicated by a minus
sign. Do not round intermediate calculations. Enter your
answer as a percent rounded to 2 decimal places.
The Argentina Fund has $755 million in assets and sells at a
discount of 5.5 percent to NAV. If the quoted share price for this
closed-end fund is $12.30, how many shares are outstanding?
Note: Do not round intermediate calculations. Round your
answer to the nearest whole number.
A closed-end fund has total assets of $330 million and liabilities of
$170,000. Currently, 17 million shares are outstanding. What is
the NAV of the fund? If the shares currently sell for $17.00, what
is the premium or discount on the fund?
Note: A negative value should be indicated by a minus
sign. Do not round intermediate calculations. Round the
NAV answer to 2 decimal places. Enter the premium or
discount as a percent rounded to 2 decimal places.
A sector fund specializing in commercial bank stocks had average
daily assets of $4.2 billion during the year. Suppose the annual
operating expense ratio for the mutual fund is 0.90 percent, and
the management fee is 0.60 percent. How much money did the
fund’s management earn during the year? If the fund doesn’t
charge any 12b-1 fees, how much were miscellaneous and
administrative expenses during the year?
Note: Do not round intermediate calculations. Enter your
answers in dollars not in millions, e.g., 1,234,567.
An open-end mutual fund has the following stocks:
Stock Shares Stock Price
A12,000 $ 86
B32,000 15
C3,500 69
D75,000 10
The fund has 49,000 shares and liabilities of $124,000. Assume
the fund is sold with a front-end load of 2.5 percent. What is the
offering price of the fund?
Note: Do not round intermediate calculations. Round your
answer to 2 decimal places.
An open-end mutual fund has the following stocks:
Stock Shares Stock Price
A16,000 $ 78
B33,000 21
C15,000 49
D89,000 26
The fund has 70,000 shares and liabilities of $185,000. What is
the NAV of the fund?
Note: Do not round intermediate calculations. Round your
answer to 2 decimal places.
The Emerging Growth and Equity Fund is a “low-load” fund. The
current offer price quotation for this mutual fund is $14.30, and
the front-end load is 1.3 percent.
a. What is the NAV?
Note: Round your answer to 2 decimal places.
b. If there are 14.1 million shares outstanding, what is the
current market value of assets owned by the fund?
Note: Do not round intermediate calculations. Round
your answer to the nearest whole number.
The Aqua Liquid Assets Money Market Mutual Fund has a NAV of
$1 per share. During the year, the assets held by this fund
appreciated by 1.2 percent. If you had invested $20,000 in this
fund at the start of the year, how many shares would you own at
the end of the year? What will the NAV of this fund be at the end
of the year?
Suppose you have $40,000 to invest. You’re considering Miller-
Moore Equine Enterprises (MMEE), which is currently selling for
$40 per share. You notice that a put option with a $40 strike is
available with a premium of $3.20. Calculate your percentage
return for the six-month holding period if the stock price declines
to $36 per share.
Note: A negative value should be indicated by a minus
sign. Leave no cells blank - be certain to enter "0"
wherever required. Do not round intermediate
calculations. Enter your 6-month return as a percent
rounded to 2 decimal places.
You found the following stock quote for DRK Enterprises,
Incorporated, at your favorite website. You also found that the
stock paid an annual dividend of $0.89, which resulted in a
dividend yield of 1.00 percent.
Company
Symbo
l
DAILY YTD 52 WEEK
Volume Clos
e
Chang
e
%Chang
e
%Chang
eHigh Low %Chang
e
DRK
Enterpris
es
DRK 18,649,1
30 ?? 0.26 0.29% 8.73% 78.1
9
71.5
811.0%
a. What was the closing price for this stock yesterday based on
today's closing price?
Note: Do not round intermediate calculations. Round
your answer to 2 decimal places.
b. How many round lots of stock were traded?
Note: Round your answer to the nearest whole round
lot.
Use the following corn futures quotes:
Corn 5,000 bushels
Contract
Month Open High Low Settle Change
Open
Interest
March 455.125 457.000 451.750 452.000 −2.750 597,913
May 467.000 468.000 463.000 463.250 −2.750 137,547
July 477.000 477.500 472.500 473.000 −2.000 153,164
September 475.000 475.500 471.750 472.250 −2.000 29,258
Suppose you buy 18 of the September corn futures contracts at
the last price of the day. One month from now, the futures price
of this contract is 462.500, and you close out your position.
Calculate your dollar profit on this investment.
Note: A negative value should be indicated by a minus
sign. Do not round intermediate calculations. Round your
answer to 2 decimal places.
You purchase 3,000 bonds with a par value of $1,000 for $984
each. The bonds have a coupon rate of 9.2 percent paid
semiannually and mature in 10 years. How much will you receive
on the next coupon date? How much will you receive when the
bonds mature?
Note: Do not round intermediate calculations. Round your
answers to the nearest whole number.
You find a stock selling for $45.13 that has a dividend yield of 1.9
percent and a PE ratio of 14.4. What is the earnings per share
(EPS) for the company?
Note: Round your answer to 2 decimal places.
You found the following stock quote for DRK Enterprises,
Incorporated, at your favorite website. You also found that the
stock paid an annual dividend of $0.73, which resulted in a
dividend yield of 1.9 percent. Assume the company has 73 million
shares of stock outstanding and a PE ratio of 12.
Company
Symbo
l
DAILY YTD 52 WEEK
Volume Clos
e
Chang
e
%Chang
e
%Chang
eHigh Low %Chang
e
DRK
Enterpris
es
DRK 18,649,1
30 ?? 0.26 0.45% 8.73% 78.1
9
51.7
411.0%
What was net income for the most recent four quarters?
Note: Do not round intermediate calculations. Round your
answer to the nearest whole number.
Suppose you purchase 550 shares of stock at $81 per share with
an initial cash investment of $22,275. The call money rate is 5
percent and you are charged a 1.5 percent premium over this
rate. Ignore dividends.
a. Calculate your return on investment one year later if the
share price is $89. Suppose instead you had purchased
$22,275 of stock with no margin. What would your rate of
return have been now?
Note: Do not round intermediate calculations. Enter
your answers as a percent rounded to 2 decimal
places.
b. Calculate your return on investment one year later if the
share price is $81. Suppose instead you had purchased
$22,275 of stock with no margin. What would your rate of
return have been now?
Note: A negative value should be indicated by a
minus sign. Do not round intermediate calculations.
Enter your answers as a percent rounded to 2 decimal
places.
c. Calculate your return on investment one year later if the
share price is $65. Suppose instead you had purchased
$22,275 of stock with no margin. What would your rate of
return have been now?
Note: A negative value should be indicated by a
minus sign. Do not round intermediate calculations.
Enter your answers as a percent rounded to 2 decimal
places.
You believe that Rose, Incorporated, stock is going to fall and you’ve decided to sell 1,000
shares short. If the current share price is $66, construct the equity account balance sheet for
this trade. Assume the initial margin is 100 percent.
Note: Input all amounts as positive values.
You’ve just opened a margin account with $18,000 at your local
brokerage firm. You instruct your broker to purchase 500 shares
of Landon Golf stock, which currently sells for $51 per share.
a. What is your initial margin?
Note: Enter your answer as a percent rounded to 2
decimal places.
b. Construct the equity account balance sheet for this position.
You purchase 600 shares of 2nd Chance Company stock on
margin at a price of $28. Your broker requires you to deposit
$10,000.
a. Suppose you sell the stock at a price of $34. What is your
return? What would your return have been had you
purchased the stock without margin?
Note: Do not round intermediate calculations. Enter
your answers as a percent rounded to 2 decimal
places.
b. What is your return if the stock price is $26 when you sell
the stock? What would your return have been had you
purchased the stock without margin?
Note: A negative value should be indicated by a
minus sign. Do not round intermediate calculations.
Enter your answers as a percent rounded to 2 decimal
places.
The stock of Flop Industries is trading at $35. You feel the stock
price will decline, so you short 300 shares at an initial margin of
55 percent. If the maintenance margin is 25 percent, at what
share price will you receive a margin call?
Note: Do not round intermediate calculations. Round your
answer to 2 decimal places.
You purchase 900 shares of 2nd Chance Company stock on
margin at a price of $56. Your broker requires you to deposit
$26,000.
a. What is your margin loan amount?
Note: Do not round intermediate calculations.
b. What is the initial margin requirement?
Note: Do not round intermediate calculations. Enter
your answer as a percent rounded to 2 decimal
places.
You have $16,000 and decide to invest on margin. If the initial
margin requirement is 80 percent, what is the maximum dollar
purchase you can make?
Note: Round your answer to the nearest whole number.
Suppose you take out a margin loan for $76,000. The rate you
pay is an effective rate of 5.9 percent. If you repay the loan in six
months, or 180 days, how much interest will you pay?
Note: Do not round intermediate calculations. Round your
answer to 2 decimal places.
You buy 300 shares of stock at a price of $80 and an initial margin
of 75 percent. If the maintenance margin is 30 percent, at what
price will you receive a margin call?
Note: Do not round intermediate calculations. Round your
answer to 2 decimal places.
The rates of return on Cherry Jalopies, Incorporated, stock over
the last five years were 19 percent, 11 percent, −1 percent, 3
percent, and 12 percent. Over the same period, the returns on
Straw Construction Company’s stock were 16 percent, 20 percent,
−4 percent, 3 percent, and 20 percent.
Calculate the variances and the standard deviations for Cherry
and Straw.
Note: Do not round intermediate calculations. Enter your
variance as a decimal rounded to 5 decimal places. Enter
your standard deviation as a percent rounded to 2 decimal
places.
A particular stock has a dividend yield of 0.9 percent. Last year,
the stock price fell from $76 to $61. What was the return for the
year?
Note: A negative value should be indicated by a minus
sign. Do not round intermediate calculations. Enter your
answer as a percent rounded to 2 decimal places.
The Ocean Fund has an NAV of $73.23 and a 2.6% front-end load. What is the
offering price?
The Liberty Fund has an offer price of $57.32 per share and a front-end load of
2.25%. What is the net asset value?
An investment company that will repurchase shares at any time is called
a(n)2__________blank2fund.
A taxable money market fund has an annual return of 3.27%. What is the
equivalent aftertax yield if the tax rate is 24%?
Use these option quotes for JL stock to answer this question:
StrikeSymbolLastChange Bid Ask VolumeOpen Interest
47.50 JLHW.X6.00 ↑.25 5.906.10 18 12
50.00 JLHJ.X4.75 ↑.30 4.805.00 17 14
The price you will pay (per underlying share) to buy the 50 call option on
JL stock is:
Use the following wheat futures quotes to answer this question.
Price = cents and 1/8ths per bushel
Expiration Last Open High Low Close Settle
Previous
Settle
08 March 1093′21093′21093′41093′21093′21093′2 1063′0
08 May 1109′41109′61109′61109′21109′41109′4 1080′2
What price would you have paid today per bushel for the March 08 wheat
futures contract if you bought the contract at the final price of the day?
Use the following bond quotes to answer this question:
Issuer
Name CouponMaturity High Low Last Change
Alpha 5.875 April 99.823 98.667 99.402 +.008
Issuer
Name CouponMaturity High Low Last Change
Industrial 2010
Beta
Movers 7.120 May 2036103.407 100.013 103.354 +.010
What was yesterday's closing price on the Beta Movers bond?
Use the following soybean futures quotes to answer this question.
Soybeans: 5,000 bushels, cents and 1/8ths of a cent per bushel
Expiration Last Net Change Open High Low Settle
08 September1314′0 −3′4 1340′21340′61313′41314′0
08 November 1285′2 +4′2 1306′01312′21280′01285′2
What was the total price fluctuation on one September 08 contract on
soybeans today?
You purchased 400 shares of stock for $28.50 a share. The initial margin
requirement is 60% and the maintenance margin is 30%. What is the maximum
percentage decrease that can occur in the stock price before you receive a
margin call?
Tess has a margin account with a 70% initial margin requirement and a 35%
maintenance margin. What is the maximum dollar amount of stock she can
purchase if her cash balance in the account is $27,000?
What is the purpose of a margin call?
To be considered liquid, a security must:
You own a stock that has produced an arithmetic average return of 5.6 percent
over the past five years. The annual returns for the first four years were 15, 10,
−18, and 8 percent, respectively. What was the rate of return on the stock in
year five?
An initial investment of $60,000 forty years ago is worth $1,222,293 today. What
is the geometric average return on this investment?
The standard deviation is a measure of:
