Chapter 1: Q13I. (page 105)
The composition of the Fingroup Fund portfolio is as follows:
The fund has not borrowed any funds, but its accrued management fee with the portfolio manager currently totals $30,000. There are 4 million shares outstanding. What is the net asset value of the fund?
$10.49
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What would you expect to be the relationship between securitization and the role of financial intermediaries in the economy? For example, what happens to the role of local banks in providing capital for mortgage loans when national markets in mortgage backed securities become highly developed?
What would you expect to happen to the spread between yields on commercial paper and Treasury bills if the economy were to enter a steep recession?
Explain the difference between a put option and a short position in a futures contract.
Dée Trader opens a brokerage account and purchases 300 shares of Internet Dreams at \(40 per share. She borrows \)4,000 from her broker to help pay for the purchase. The interest rate on the loan is 8%.
a. What is the margin in Dée’s account when she first purchases the stock?
b. If the share price falls to $30 per share by the end of the year, what is the remaining margin in her account? If the maintenance margin requirement is 30%, will she receive a margin call?
c. What is the rate of return on her investment?
How do security dealers earn their profits?
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