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Question 1

You purchased four call option contracts with a strike price of $25.00 and a premium of $1.25. At expiration, the stock was selling for $26.80 a share. What is the total profit or loss on your option position? What if your stock is selling $25.00? What is the total profit or loss on your option position?

Question 2

You purchased seven put option contracts with a strike price of $40 and an option premium of $1.25. You closed your contract on the expiration date when the stock was selling for $41.50 a share. What is your total profit or loss on your option position?

Question 3

What is the difference between a cash and margin account? And what is a Margin Call.

Question 4

Theresa has a margin account with a 60 percent initial margin requirement and a 35 percent maintenance margin. What is the maximum dollar amount of stock she can purchase if her cash balance in the account is $35,300?

Question 5

Suppose the call money rate s 4, 5% and you pay s spread of 2.5% over that. You buy 800 shares of stock at $34 per share. You put up $15,000. If your broker requires a 30% maintenance margin. What price you will be subjected to margin call? One year later, the stock is selling for $48 per share, $34 and $29. Construct an equity balance sheet for each price and the change in margin account. Calculate your return on investment for each share price above.

Question 6

What are the two types of equity securities? Please discuss by giving the examples.

Question 7

Todd purchased 600 shares of stock at a price of $68.20 a share and received a dividend of $1.42 per share. After six months, he resold the stock for $71.30 a share. What was his total dollar return?

Question 8

You purchase 275 shares of 2nd Chance Co. Stock on margin at a price of $53. Your broker requires you to deposited $8,000.what is your margin loan amount? What is the initial margin requirement?

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