1. Which of the following is a money market instrument? A) Treasury Bond B) Pref
ID: 2803118 • Letter: 1
Question
1. Which of the following is a money market instrument? A) Treasury Bond B) Preferred Stock C) Municipal Bond D) Eurodollar 2. Borrowing a security from your broker in order to sell it, with the intention of repurchas A) post-purchasing B) pre-selling C) short-selling D) reverse investing ing it later when the price is lower, is called and receive the 3. Investors purchase Treasury bills at a at maturity A) B) C) discount; face value premium; face value plus interest discount; face value plus interest premium; face value 4. An investor sells short 200 shares of stock at $15 per share. The initial margin requirement is 60%. The investor earns no interest on funds in the margin account and no dividends are paid. What is the investor's rate of return after one year if the short sale is covered at $12 per share? 20.0% -20.0% 33.3% -33.3% A) B) C) D) 5. Shares of a closed-end fund A) always trade at net asset value, because large investors can redeem their shares in the fund for a portfolio of stocks always trade at net asset value, because all investors can redeem their shares in the fund for net asset value can trade at a substantial discount from net asset value can trade at a substantial premium above net asset value B) C) D)Explanation / Answer
1. Eurodollar
2. short selling
3. discount, face value
4. inital inv = 60% of 15 = 9.00
profit = 15 - 12 = 3
rate of return = 3/9 = 33.33%
max of 4 to be answered
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