Q1
The composition of the Fingroup Fund portfolio is as follows:
Stock Shares Price
A 200,000 $ 33
B 266,000 59
C 417,000 37
D 510,000 50
During the year the portfolio manager sells all of the holdings of stock D and replaces them with 200,000 shares of stock E at $40 per share and 700,000 shares of stock F at $25 per share.
What is the portfolio turnover rate? (Round your answer to 1 decimal place.)
Turnover rate
Q2
You’ve borrowed $37,000 on margin to buy shares in Bombardier, which is now selling at $148 per share, and you have invested $37,000 of your own. Your account starts at the initial margin requirement of 50%. The minimum margin is 35%. Two days later, the stock price falls to $143 per share.
a. Will you receive a margin call?
multiple choice
Yes
No
B) How low can the price of Bombardier shares fall before you receive a margin call? (Round your answer to 2 decimal places. Omit $ sign in your response.)
Price $