Investments

1.

a) F.B.N’s share were under prided so overall cost was 70,000+ (3*100,000) = $370,000

b) The 3$ undervaluing is not a source of profit for underwriter.

2.

A stop loss will liquidate the order if stock price reaches a certain price or percentage loss. A limit sell will sell a certain number of stocks if the price reaches a certain target either high or low. A market order is placed at the current market price.

3.

a) There is no limit to the maximum loss because the price might keep rising.

b) If a stop-buy order is placed at 210$ then the maximum loss incurred will be 1000$

4.

a)

300 x 40 = 12,000$

12,000-4000 = 8,000 margin

8,000/12,000 = 66.66% margin ratio

b)

30*300= 9000

4000* 1.08= 4320

9000-4320 = 4680

4680/9000= 52% margin ratio meets 30% margin requirement

c)

(4680-8000)/8000= -41.5% rate of return

5.

a)

shares will be filled at $50.25 because it is the lowest asked sell price.

B)

The first 100 shares will trade at 51.50$

C)

I would increase because there are more buy orders then sell that are close in price. Sell orders are way higher and dispersed causing little downwards pressure on this security.

6.

a)

10000 *.1= $1000

5000 * 1.08 = 400

(1000-400)/5000=.12=12%

b)

(200P-5000)/200P=.3 P=$35.71 lowest price

7.

a) 100 *50= 5000 *50% margin = $2500

b) total assets

7500-100p/100p= .3

P=$57.69

8)

D. not enough info