Homework Margin Purchases. Dr. Patrick Toche


 Phillip Flynn
 2 years ago
 Views:
Transcription
1 Homework Margin Purchases Dr. Patrick Toche
2 A dagger indicates a possibly more challenging question. Maintenance Margin 1. You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of 8% per year and invest $10,000 in the stock. (a) What will be your rate of return if the price of Telecom stock goes up by 10% over the (Ignore any expected dividend payments) (b) How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately. 2. You ve borrowed $20,000 on margin to buy shares in Disney, which is now selling at $40 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $35 per share. (a) Will you receive a margin call? (b) How low can the price of Disney shares fall before you receive a margin call? 3. Suppose that Intel currently sells at $40 per share. You buy 500 shares, using $15,000 of your own money and borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8%. (a) What is the percentage change in the net worth on your brokerage account if the stock price changes overnight to: (i) $44; (ii) $40; (iii) $36? (b) Suppose the maintenance margin is 25%. How low can the price fall before you get a margin call? (c) Suppose you finance the initial purchase with as little as $10,000 of your own money instead. How low can the price fall before you get a margin call? (d) Suppose again you invest $15,000 of your own money. What is the rate of return on your margined position after one year if the stock price changes to: (i) $44; (ii) $40; (iii) $36? 2
3 (e) Continue to assume that one year has passed. How low can the price fall before you get a margin call? 4. You deposit $100,000 of your own capital in a brokered account and borrow an additional $100, 000 from your broker. You invest everything in a single stock. The current market price of the stock is $100 per share. Your broker charges an interest rate of r % per year. Your broker s maintenance margin is 30%. You expect the stock to pay a semiannual dividend payment of $5 per share. (a) What would be your annual rate of return if the stock price rose by 10% over the (b) What would be your annual rate of return if the stock price fell by 10% over the (c) You are bullish on the stock. You believe the probability of a 10% rise is 60% and the probability of a 10% fall is 40%. What is your expected rate of return? Is it positive? (d) The day after you purchase the stock, the price falls to $70. Will you receive a margin call? 5. An investor buys $11,000 worth of stock at $100 per share, contributing $7,000 and borrowing the remaining $4,000 from a broker. (b) The price falls to $60. Calculate the margin percentage after the fall. (c) The broker s maintenance margin is 30%. Do you get a margin call? 6. An investor buys $15,000 worth of stock at $50 per share, contributing $9,000 and borrowing the remaining $6,000 from a broker. (b) The price falls to $40. Calculate the margin percentage after the fall. (c) The price falls to $30. The broker s maintenance margin is 35%. Do you get a 3
4 margin call? 7. The current market price of Telecom stock is $50 per share. You have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of r% per year. Altogether you invest a total of $10,000 in the stock. Telecom stock pays no dividend. Your broker s maintenance margin is 40%. (i) What would be your annual rate of return if the stock price rose by 10% over the (ii) What would be your annual rate of return if the stock price fell by 10% over the (iii) You are bullish on Telecom stock. You believe the probability of a 10% rise is 50% and the probability of a 10% fall is 25%. What is your expected rate of return? Is it positive? (iv) The day after you purchase the stock, the price falls by $10. Will you receive a margin call? 8. The current market price of Telecom stock is $50 per share. You have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of r% per year. Altogether you invest a total of $10,000 in the stock. Telecom stock pays no dividend. Your broker s maintenance margin is 40%. (i) What would be your annual rate of return if the stock price rose by 10% over the (ii) What would be your annual rate of return if the stock price fell by 10% over the (iii) You are bullish on Telecom stock. You believe the probability of a 10% rise is 50% and the probability of a 10% fall is 25%. What is your expected rate of return? Is it positive? (iv) The day after you purchase the stock, the price falls to $10. Will you receive a 4
5 margin call? 9. An investor buys $150,000 of stock at $50 per share, contributing $90,000 and borrowing $60,000 from a broker. The broker s annual interest rate is 10% and maintenance margin 40%. (b) The investor is bullish on the stock and believes there is an 80% probability that the stock price will rise overnight by 10% and a 20% probability that it will fall by 10%. What is the expected rate of return overnight? (c) The stock price falls overnight to $40. Calculate the account s margin percentage after the fall. (d) One year later, the stock price is still $40. However, the stock has paid quarterly dividends of $2 per share. What is the annual rate of return? 10. An investor buys 3, 000 shares of stock at $50 per share, contributing 60% of the total and borrowing the rest from a broker. The investor holds the stock long for one year. The stock has paid quarterly dividends of $2 per share. The broker s annual interest rate is 10% and maintenance margin 40%. The stock price has risen to $60. (a) Calculate the account s margin percentage at the year end. (b) Calculate the annual rate of return at the year end. 11. An investor buys 3, 000 shares of stock at $50 per share, contributing 60% of the total and borrowing the rest from a broker. The investor holds the stock long for one year. The stock has paid quarterly dividends of $2 per share. The broker s annual interest rate is 10% and maintenance margin 40%. The stock price is back to $50 at the year end. (a) Calculate the account s margin percentage at the year end. (b) Calculate the annual rate of return at the year end. 5
Homework Margin Purchases. Dr. Patrick Toche
Homework Margin Purchases Dr. Patrick Toche A dagger indicates a possibly more challenging question. Maintenance Margin 1. You are bullish on Telecom stock. The current market price is $50 per share, and
More informationMargin Requirements & Margin Calls
Margin Requirements & Margin Calls Dr. Patrick Toche References : Zvi Bodie, Alex Kane, Alan J. Marcus. Essentials of Investment. McGraw Hill Irwin. Chapter 3 of the BodieKaneMarcus textbook will be
More informationMargin Requirements & Margin Calls
Margin Requirements & Margin Calls Dr. Patrick Toche References : Zvi Bodie, Alex Kane, Alan J. Marcus. Essentials of Investment. McGraw Hill Irwin. Chapter 3 of the BodieKaneMarcus textbook will be
More informationInvestment Analysis (FIN 383) Fall 2009. Homework 2
Investment Analysis (FIN 383) Fall 2009 Homework 2 Instructions: please read carefully You should show your work how to get the answer for each calculation question to get full credit The due date is Thu,
More informationShort Sale. Dr. Patrick Toche
Short Sale Dr. Patrick Toche References : Zvi Bodie, Alex Kane, Alan J. Marcus. Essentials of Investment. McGraw Hill Irwin. Chapter 3 of the BodieKaneMarcus textbook will be followed closely. Other
More information1. Overconfidence {health care discussion at JD s} 2. Biased Judgments. 3. Herding. 4. Loss Aversion
In conditions of laissezfaire the avoidance of wide fluctuations in employment may, therefore, prove impossible without a farreaching change in the psychology of investment markets such as there is no
More informationInvestments I HW 2  Solutions
Investments I HW 2  Solutions Sailesh Tiwari 26 September, 2008 Problem 1 (BKM Ch3. Ques.3) (a) The Trader buys 300 Internet Dreams shares at $40 per share. Total cost of the shares is 300 $40 = $12000.
More informationBodie, Kane, Marcus, Perrakis and Ryan, Chapter 3
Bodie, Kane, Marcus, Perrakis and Ryan, Chapter 3 Answers to Selected Problems 1 FBN Inc has just sold 100,000 shares in an initial public offering The underwriter s explicit fees were $70,000 The offering
More informationInvestment Analysis (FIN 670) Fall 2009. Homework 2
Investment Analysis (FIN 670) Fall 2009 Homework 2 Instructions: please read carefully You should show your work how to get the answer for each calculation question to get full credit The due date is Tue,
More informationFinancial Markets And Financial Instruments  Part II. How Securities are Traded? Spread. Brokerage Accounts. Commissions. Commissions: Online Brokers
Financial Markets And Financial Instruments  Part II How Securities are Traded? Brokerage Accounts You can choose from two types of accounts to open To open an account, you need to choose a broker Commissions
More informationMargin Trading. A. How Margin Works? B. Why Trading on Margin Can Be Very Risky and Is Not Suitable for Everyone? C. Conclusion
A. How Margin Works? B. Why Trading on Margin Can Be Very Risky and Is Not Suitable for Everyone? C. Conclusion 2 An investor who purchases securities may pay for the securities in full, from his own resources,
More informationTrading Costs. Characteristics of wellfunctioning markets
Trading Costs Commission: fee paid to broker for making the transaction Spread: cost of trading with dealer Bid: price dealer will buy from you Ask: price dealer will sell to you Spread: ask  bid Combination:
More informationOperation of Stock Exchange
Topics to be Discussed Stock Market Transactions Types of Brokers Role of Specialist Types of Trading Orders Trading and Settlement Dates Stock Market Transactions When you buy, you buy from another person
More informationChapter 8  Owning and Trading Equities
81: ANSWERS TO QUESTIONS & PROBLEMS Chapter 8  Owning and Trading Equities The market order should be executed at the open. When the price rose from $88 to $90 it triggered the limit order, which we
More informationACTIVITY 8.1 A MARGINAL PLAY
LESSON 8 BUYING ON MARGIN AND SELLING SHORT ACTIVITY 8.1 A MARGINAL PLAY Stockbroker Luke, Katie, and Jeremy are sitting around a desk near a sign labeled Brokerage Office. The Moderator is standing in
More informationDetermination of Forward and Futures Prices
Determination of Forward and Futures Prices Options, Futures, and Other Derivatives, 8th Edition, Copyright John C. Hull 2012 Short selling A popular trading (arbitrage) strategy is the shortselling or
More information2 Buying and Selling Securities
Chapter 2 2 Buying and Selling Securities Getting Started Brokerage Accounts Cash Accounts Margin Accounts Short Sales Investor Objectives, Constraints, and Strategies 21 McGrawHill/Irwin Copyright 2005
More informationProblem Set: Annuities and Perpetuities (Solutions Below)
Problem Set: Annuities and Perpetuities (Solutions Below) 1. If you plan to save $300 annually for 10 years and the discount rate is 15%, what is the future value? 2. If you want to buy a boat in 6 years
More informationUnderstanding Margin and Its Risks
Understanding Margin and Its Risks www.siebertnet.com Before opening a margin account, you should have a clear understanding of the basic facts about margin and the risks of trading securities on margin.
More informationStock Dividends. Stock Dividends and Stock Splits. Amount of Stock Dividend. Created in 2006 By Michael Worthington Elizabeth City State University
Stock Dividends and Stock Splits Created in 2006 By Michael Worthington Elizabeth City State University Stock Dividends Stock Dividends consist of additional shares of issued to current stockholders (instead
More informationTMX TRADING SIMULATOR QUICK GUIDE. Reshaping Canada s Equities Trading Landscape
TMX TRADING SIMULATOR QUICK GUIDE Reshaping Canada s Equities Trading Landscape OCTOBER 2014 Markets Hours All market data in the simulator is delayed by 15 minutes (except in special situations as the
More informationMastering the Markets
www.mastermindtraders.com Presents Mastering the Markets Your Path to Financial Freedom DISCLAIMER Neither MasterMind Traders or any of its personnel are registered brokerdealers or investment advisors.
More informationCHAPTER 3: ANSWERS OF HOW SECURITIES ARE TRADED
CHAPTER 3: ANSWERS OF HOW SECURITIES ARE TRADED PROBLEM SETS 1. Answers to this problem will vary. 2. The dealer sets the bid and asked price. Spreads should be higher on inactively traded stocks and lower
More informationHow CFD Trading Works?
What are CFD s In finance, a contract for difference (CFD) is a contract between two parties, typically described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference
More informationChapter. 2 Buying and. Selling Securities. McGrawHill/Irwin. Copyright 2008 by The McGrawHill Companies, Inc. All rights reserved.
Chapter 2 Buying and Selling Securities McGrawHill/Irwin Copyright 2008 by The McGrawHill Companies, Inc. All rights reserved. Buying and Selling Securities Don t Gamble! Take all your savings and buy
More informationHomework 5 Solutions
Homework 5 Solutions Chapter 4C Investment Plans. Use the savings plan formula to answer the following questions. 30. You put $200 per month in an investment plan that pays an APR of 4.5%. How much money
More informationDUKE UNIVERSITY Fuqua School of Business. FINANCE 351  CORPORATE FINANCE Problem Set #8 Prof. Simon Gervais Fall 2011 Term 2
DUKE UNIVERSITY Fuqua School of Business FINANCE 351  CORPORATE FINANCE Problem Set #8 Prof. Simon Gervais Fall 2011 Term 2 Questions 1. Hors d Age Cheeseworks has been paying a regular cash dividend
More information21.1 Arithmetic Growth and Simple Interest
21.1 Arithmetic Growth and Simple Interest When you open a savings account, your primary concerns are the safety and growth of your savings. Suppose you deposit $1000 in an account that pays interest at
More informationStocksQuest Lesson #3: Selling Short and Buying on Margin
StocksQuest Lesson #3: Selling Short and Buying on Margin Selling Short ~ Selling short occurs when investors sell stocks they don t actually own, they do this by borrowing stocks instead of buying stocks.
More informationIn effect CFD s are financial derivatives, originally known as Traded Options, that allow traders to take advantage of prices moving up (long
What are CFD s In finance, a contract for difference (CFD) is a contract between two parties, typically described as "buyer" and "seller", stipulating that the seller will pay to the buyer the difference
More informationFinding the Payment $20,000 = C[1 1 / 1.0066667 48 ] /.0066667 C = $488.26
Quick Quiz: Part 2 You know the payment amount for a loan and you want to know how much was borrowed. Do you compute a present value or a future value? You want to receive $5,000 per month in retirement.
More informationThe Basics of Accounting ACCT 201
The Basics of Accounting ACCT 201 Content Accounting definition Accounting equation Accounting elements Asset, Liabilities, & Equity Transactions Accounts Receivable vs Accounts Payable Retained Earnings
More informationTypes of Stock. Common Stock most common form of stock. Preferred Stock. Companies may customize other classes of stock.
Stock Market Basics What are Stocks? Stock is ownership in a publicly traded company. Stock is a claim on the company s assets and earnings. The more stock you have, the greater your claim as an owner.
More informationChapter 6. Discounted Cash Flow Valuation. Key Concepts and Skills. Multiple Cash Flows Future Value Example 6.1. Answer 6.1
Chapter 6 Key Concepts and Skills Be able to compute: the future value of multiple cash flows the present value of multiple cash flows the future and present value of annuities Discounted Cash Flow Valuation
More informationChapter 11: Financial Markets Section 3
Chapter 11: Financial Markets Section 3 Objectives 1. Identify the benefits and risks of buying stocks. 2. Describe how stocks are traded. 3. Explain how stock performance is measured. 4. Describe the
More informationHigher National Diploma in Business Administration Second Year, First Semester Examination 2014 BA 2113  Business Finance
[All Rights Reserved] SLIATE SRI LANKA INSTITUTE OF ADVANCED TECHNOLOGICAL EDUCATION (Established in the Ministry of Higher Education, vide in Act No. 29 of 1995) Higher National Diploma in Business Administration
More informationBusiness 2019. Fundamentals of Finance, Chapter 6 Solution to Selected Problems
Business 209 Fundamentals of Finance, Chapter 6 Solution to Selected Problems 8. Calculating Annuity Values You want to have $50,000 in your savings account five years from now, and you re prepared to
More informationA stock is a share in the ownership of a company. Stock represents a claim on the company s assets and earnings.
Stock Market Basics What are stocks? A stock is a share in the ownership of a company. Stock represents a claim on the company s assets and earnings. As an owner (shareholder), you are entitled to your
More informationNEW MARGIN REQUIREMENTS FOR DAY TRADING
CLIENT MEMORANDUM NEW MARGIN REQUIREMENTS FOR DAY TRADING The regulation of securities credit as it applies to day trading will change substantially in August and September of this year as a result of
More informationFIN 204: Money and Banking Homework #2: Solutions. Due: 8 Apr. 2008, 14:30, Instructor: Petar Stankov
I strongly encourage you to work in groups and discuss your solutions, and only then write them down for me. This will save you time AND will improve your understanding of the subject. I do NOT advise
More informationDiscounted Cash Flow Valuation
6 Formulas Discounted Cash Flow Valuation McGrawHill/Irwin Copyright 2008 by The McGrawHill Companies, Inc. All rights reserved. Chapter Outline Future and Present Values of Multiple Cash Flows Valuing
More informationHandbook for finding the right FX Broker
Handbook for finding the right FX Broker With currency trading becoming even more popular, the number of brokers is growing at a rapid rate. What should one look at when deciding which broker to open an
More informationCHAPTER 16. Stocks and Bonds
CHAPTER 16 Stocks and Bonds SECTION 1: Stocks Financial Markets Stocks and bonds are bought and sold in a financial market. Financial markets channel money from some people to other people. They bring
More informationFederal Reserve Monetary Policy
Federal Reserve Monetary Policy To prevent recession, earlier this decade the Federal Reserve s monetary policy pushed down the shortterm interest rate to just 1%, the lowest level for many decades. Longterm
More information2016 2010 SouthWestern, Cengage Learning
Chapter 2 Investing in Stocks 2.1 Evaluating Stocks 2.2 Buying and Selling Stocks Lesson 2.1 Evaluating Stocks Learning Objectives LO 11 Describe features of stock and types of stocks. LO 12 Explain
More informationOptions on. Dow Jones Industrial Average SM. the. DJX and DIA. Act on the Market You Know Best.
Options on the Dow Jones Industrial Average SM DJX and DIA Act on the Market You Know Best. A glossary of options definitions appears on page 21. The Chicago Board Options Exchange (CBOE) was founded in
More informationBUYING STOCKS ON MARGIN
BUYING STOCKS ON MARGIN The Basics BEFORE YOU INVEST, INVESTIGATE TM Securities Industry Association SIA thanks the Discount Brokerage and Investor Education Committees and the public relations executives
More informationInvestments, Chapter 4
Investments, Chapter 4 Answers to Selected Problems 2. An openend fund has a net asset value of $10.70 per share. It is sold with a frontend load of 6 percent. What is the offering price? Answer: When
More informationMargin borrowing. Set your fi nancial future in motion.
Margin borrowing Set your fi nancial future in motion. Maximize your brokerage account capabilities. Margin trading entails greater risk and is not suitable for all investors. Please speak with your broker
More informationSuggested Answers to Discussion Questions
Suggested Answers to Discussion Questions 1. One reason for the large initial returns is the significant amount of hype surrounding new issues. This was especially true in the late 1990s, during what is
More informationCONTRACTS FOR DIFFERENCE
CONTRACTS FOR DIFFERENCE Cornhill Capital helps private client investors realise significant value in an innovative trading environment. Cornhill Capital Limited is a leading independent investment company
More informationLeverage. Chapter 1 LEVERAGE. In this chapter, you will be able to:
Chapter 1 Leverage In this chapter, you will be able to: Understand how traders magnify their profits with leverage Understand how to profit from the market when it is declining by short selling Identify
More informationTHE STOCK MARKET GAME GLOSSARY
THE STOCK MARKET GAME GLOSSARY Accounting: A method of recording a company s financial activity and arranging the information in reports that make the information understandable. Accounts payable: The
More informationYou just paid $350,000 for a policy that will pay you and your heirs $12,000 a year forever. What rate of return are you earning on this policy?
1 You estimate that you will have $24,500 in student loans by the time you graduate. The interest rate is 6.5%. If you want to have this debt paid in full within five years, how much must you pay each
More informationHow Securities Are Traded
How Securities Are Traded What is this project about? You will learn how securities are traded on exchanges, particularly how to conduct margin trades, short sales, and submit limit orders. What case do
More informationSection 8.1. I. Percent per hundred
1 Section 8.1 I. Percent per hundred a. Fractions to Percents: 1. Write the fraction as an improper fraction 2. Divide the numerator by the denominator 3. Multiply by 100 (Move the decimal two times Right)
More informationInvestments 2: Creating a Personal Investment Plan. Assignments
Financial Plan Assignments Assignments Open your copy of Learning Tool 5A: Investment Plan Example. Make sure you understand the terminology related to investment plans. I will discuss many aspects of
More informationFCS5510 Sample Homework Problems and Answer Key Unit03 CHAPTER 6. INVESTMENT COMPANIES: MUTUAL FUNDS
FCS5510 Sample Homework Problems and Answer Key Unit03 CHAPTER 6. INVESTMENT COMPANIES: MUTUAL FUNDS PROBLEMS 1. What is the net asset value of an investment company with $10,000,000 in assets, $500,000
More informationUniversity of Rio Grande Fall 2010
University of Rio Grande Fall 2010 Financial Management (Fin 20403) Practice Questions for Midterm 1 Answers the questions. (Or Identify the letter of the choice that best completes the statement if there
More informationInvestment 320 Dr. Ahmed Y. Dashti
Investment 320 Dr. Ahmed Y. Dashti د. احمد يوسف دشتي Interactive quiz from text's web 1. An investor with a short position will profit if the security increases in value. 2. The Security Investors Protection
More informationChapter 3. How Securities are Traded
Chapter 3 How Securities are Traded Primary vs. Secondary Security Sales Primary: When firms need to raise capital, they may choose to sell (or float) new securities. These new issues typically are marketed
More informationWho Should Consider Using Covered Calls?
Who Should Consider Using Covered Calls? An investor who is neutral to moderately bullish on some of the equities in his portfolio. An investor who is willing to limit upside potential in exchange for
More informationA) 1.8% B) 1.9% C) 2.0% D) 2.1% E) 2.2%
1 Exam FM Questions Practice Exam 1 1. Consider the following yield curve: Year Spot Rate 1 5.5% 2 5.0% 3 5.0% 4 4.5% 5 4.0% Find the four year forward rate. A) 1.8% B) 1.9% C) 2.0% D) 2.1% E) 2.2% 2.
More informationLecture 4: Properties of stock options
Lecture 4: Properties of stock options Reading: J.C.Hull, Chapter 9 An European call option is an agreement between two parties giving the holder the right to buy a certain asset (e.g. one stock unit)
More informationBEAR: A person who believes that the price of a particular security or the market as a whole will go lower.
Trading Terms ARBITRAGE: The simultaneous purchase and sale of identical or equivalent financial instruments in order to benefit from a discrepancy in their price relationship. More generally, it refers
More informationInternational Financial Strategies Time Value of Money
International Financial Strategies 1 Future Value and Compounding Future value = cash value of the investment at some point in the future Investing for single period: FV. Future Value PV. Present Value
More informationChapter. Investing in Stocks. 12.1 Evaluating Stocks 12.2 Buying and Selling Stock. 2010 SouthWestern, Cengage Learning
Chapter 12 Investing in Stocks 12.1 Evaluating Stocks 12.2 Buying and Selling Stock 2010 SouthWestern, Cengage Learning Lesson 12.1 Evaluating Stocks GOALS What are the features of a stock? What are the
More informationTHE STOCK EXCHANGE. Agócs Adrienne
THE STOCK EXCHANGE Agócs Adrienne OUTLINE The stock exchange shares, bonds and securities The main roles of the stock exchange Bulls and bears Types of securities Different information about the performance
More informationKey Concepts and Skills. Multiple Cash Flows Future Value Example 6.1. Chapter Outline. Multiple Cash Flows Example 2 Continued
6 Calculators Discounted Cash Flow Valuation Key Concepts and Skills Be able to compute the future value of multiple cash flows Be able to compute the present value of multiple cash flows Be able to compute
More information2 The Mathematics. of Finance. Copyright Cengage Learning. All rights reserved.
2 The Mathematics of Finance Copyright Cengage Learning. All rights reserved. 2.3 Annuities, Loans, and Bonds Copyright Cengage Learning. All rights reserved. Annuities, Loans, and Bonds A typical definedcontribution
More informationExcess Equity and Buying Power. NonRestricted Accounts. Minimum Maintenance Requirement. NYSE/NASD Minimum Credit Requirement
Margins Excess Equity and Buying Power Restricted Accounts SameDay Substitution NonRestricted Accounts Minimum Maintenance Requirement NYSE/NASD Minimum Credit Requirement The Short Sale Credit Balance
More informationNomura Securities Co., Ltd. Nonconsolidated Balance Sheets
ASSETS Nonconsolidated Balance Sheets Nomura Securities Co., Ltd. (Millions of yen) March 31, 2014 March 31, 2015 Increase/(Decrease) Current Assets 12,488,887 13,949,399 1,460,512 Cash and time deposits
More informationGoals: What are you saving your money for college, a car, retirement? Decide what you want and how much you will need for each item.
Mr. Kaufman Investing Notes: You want to invest in order to create wealth. Are you guaranteed to be wealthy if you invest? NO! However, if you do not save money and invest it then there is no chance for
More informationBonds. Describe Bonds. Define Key Words. Created 2007 By Michael Worthington Elizabeth City State University
Bonds OBJECTIVES Describe bonds Define key words Explain why bond prices fluctuate Compute interest payments Calculate the price of bonds Created 2007 By Michael Worthington Elizabeth City State University
More informationProfessionally Managed Portfolios of ExchangeTraded Funds
ETF Portfolio Partners C o n f i d e n t i a l I n v e s t m e n t Q u e s t i o n n a i r e Professionally Managed Portfolios of ExchangeTraded Funds P a r t I : I n v e s t o r P r o f i l e Account
More informationStock Market for Beginners November 2013
Stock Market for Beginners November 2013 What is a share? If you own a share, you own a portion of a company. In the same way you can see your ownership of a company as a slice of pie, cut out of a bigger
More informationBuying Equity Call Options
Buying Equity Call Options Presented by The Options Industry Council 1888OPTIONS Equity Call Options Options involve risks and are not suitable for everyone. Prior to buying or selling options, an investor
More informationInvestors Choice how the plan works
Investors Choice how the plan works How do I get started and enroll? 1. To invest online, log on to www.investpower.com and choose the Paychex logo on the sidebar. Then select Invest Now and follow the
More informationGoals Information and Trading
Information and Trading Economics 71a Gitman/Madura Chapter 16 Lecture notes 9 Information sources Information Sources Web Private Free and subscription Government Federal Reserve Information Sources Key
More informationChapter 5 Discounted Cash Flow Valuation
Chapter Discounted Cash Flow Valuation Compounding Periods Other Than Annual Let s examine monthly compounding problems. Future Value Suppose you invest $9,000 today and get an interest rate of 9 percent
More informationLesson 1. Net Present Value. Prof. Beatriz de Blas
Lesson 1. Net Present Value Prof. Beatriz de Blas April 2006 1. Net Present Value 1 1. Introduction When deciding to invest or not, a rm or an individual has to decide what to do with the money today.
More informationMBA 8130 FOUNDATIONS OF CORPORATION FINANCE FINAL EXAM VERSION A
MBA 8130 FOUNDATIONS OF CORPORATION FINANCE FINAL EXAM VERSION A Fall Semester 2004 Name: Class: Day/Time/Instructor:. Read the following directions very carefully. Failure to follow these directions will
More information3. If an individual investor buys or sells a currently owned stock through a broker, this is a primary market transaction.
Spring 2012 Finance 3130 Sample Exam 1A Questions for Review 1. The form of organization for a business is an important issue, as this decision has very significant effect on the income and wealth of the
More informationAdvantages and disadvantages of investing in the Stock Market
Advantages and disadvantages of investing in the Stock Market There are many benefits to investing in shares and we will explore how this common form of investment can be an effective way to make money.
More informationChapter 21: Options and Corporate Finance
Chapter 21: Options and Corporate Finance 21.1 a. An option is a contract which gives its owner the right to buy or sell an underlying asset at a fixed price on or before a given date. b. Exercise is the
More informationUnderstanding Bank Ratios
The Directors Education Series Understanding Bank Ratios Bankers Insight Group, LLC JEFFERY W. JOHNSON What Banking Factors Should be Measured? Asset Quality Capital Adequacy Earnings Liquidity 1 Asset
More informationIntroduction to Money & Banking Lecture notes 2010 Matti Estola
Introduction to Money & Banking Lecture notes 2010 Matti Estola Literature Henderson & Poole: Principles of Economics, Mishkin: The Economics of Money, Banking, and Financial Markets, Extra material given
More informationDiscounted Cash Flow Valuation
BUAD 100x Foundations of Finance Discounted Cash Flow Valuation September 28, 2009 Review Introduction to corporate finance What is corporate finance? What is a corporation? What decision do managers make?
More informationLearn about exchangetraded funds. Investor education
Learn about exchangetraded funds Investor education Become a more knowledgeable exchangetraded funds investor In this education guide, you ll get answers to common questions about exchangetraded funds,
More informationNEWS RELEASE GREAT AMERICAN BANCORP, INC. UNAUDITED RESULTS FOR FOURTH QUARTER 2008 NET INCOME FOR FISCAL 2008  $1,110,000
NEWS RELEASE FOR IMMEDIATE RELEASE January 13, 2009 Contact: Ms. Jane F. Adams Chief Financial Officer and Investor Relations (217) 3562265 GREAT AMERICAN BANCORP, INC. UNAUDITED RESULTS FOR FOURTH QUARTER
More informationOrdinary Shares Presenter Date
1 Ordinary Shares Presenter Date Contents What is a share? What is an ordinary shares? What are dividends? What is the share price? The benefits of ordinary shares Some things to consider when investing
More informationPercent, Sales Tax, & Discounts
Percent, Sales Tax, & Discounts Many applications involving percent are based on the following formula: Note that of implies multiplication. Suppose that the local sales tax rate is 7.5% and you purchase
More informationLecture 15: Final Topics on CAPM
Lecture 15: Final Topics on CAPM Final topics on estimating and using beta: the market risk premium putting it all together Final topics on CAPM: Examples of firm and market risk Shorting Stocks and other
More informationUnderstanding your account situation
Understanding your account situation This guide helps you to understand your account situation on Penson s intranet web site The first section describes what we think are the most useful pages of Penson
More informationAnswers to Concepts in Review
Answers to Concepts in Review 1. (a) In the money market, shortterm securities such as CDs, Tbills, and banker s acceptances are traded. Longterm securities such as stocks and bonds are traded in the
More informationIntroduction To Stock Options: The Basics. Mark D. Wolfinger
Introduction To Stock Options: The Basics Mark D. Wolfinger 2008 1 Table of Contents Introduction Chapter 1. What is an Option? Chapter 2. How Does an Option Work? Chapter 3. Stock Options Chapter 4. Getting
More informationModule 5 Index CFDs. Course #: Title. Version 1 August 2013 1
Module 5 Index CFDs Course #: Title Topic 1: S&P/ASX 200 CFDs... 3 Initial margin... 3 Variation margins... 3 Cashflows... 4 Topic 2: S&P/ASX 200 CFD strategies... 6 Trade broad market movements... 6 Protect
More informationCompound Interest Formula
Mathematics of Finance Interest is the rental fee charged by a lender to a business or individual for the use of money. charged is determined by Principle, rate and time Interest Formula I = Prt $100 At
More informationExercise 1 for Time Value of Money
Exercise 1 for Time Value of Money MULTIPLE CHOICE 1. Which of the following statements is CORRECT? a. A time line is not meaningful unless all cash flows occur annually. b. Time lines are useful for visualizing
More informationThe Secret to Day Trading How to Use Multiple Time Frames for Pinpoint Entry and Exit Points
The Secret to Day Trading How to Use Multiple Time Frames for Pinpoint Entry and Exit Points Now I m not going to advocate day trading. That isn t what this report is about. But there are some principles
More information