a. Say you buy 87 shares of GS for $164 per share on 70% initial margin. The maintenance margin is 30%.

What is the highest stock price at which you would receive a margin call?

$65.28

$70.29

$82.005

$$99.58

b. In a capitalist system, financial markets play a central role in the allocation of capital resources. That is to say, prices serve as signals and help organize society.

True.

False.

c. Over the past twenty years, investors have generally moved away from actively managed mutual funds towards passively managed index funds and ETFs.

True

False

d. If you have a margin account and your broker requires 40% initial margin, this means:

you can borrow no more than 40% of the purchase price of the stock from your broker.

you can borrow no more then 60% of the purchase prices of the stock from you broker.

e. There are ETFs which allow you to invest in crude oil, natural gas, and gold.

True

False

f. When you short sell a stock you are:

buying the stock and waiting for the stock to decline before selling it.

buying the stock and simultaneously placing a limit sell order to attempt to lock in a profit.

borrowing the stock from your broker and selling it with the obligation to return the stock to your broker in the future.

Answer rating: 100% (QA)

a Amount borrowed 87164 87164 70 Amount borrowed 14268 998760 428040 Margin Call 42804087 130 Margin ... View the full answer