FIN INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT
Problem 2 margin (Ch 3). Suppose you have $20,000 cash in your margin account, and you
place a market order to buy 1000 shares of ORCL. The bid/ask for ORCL is 34.11/34.13. How
much margin load is required? What is your account equity percentage?
If, after 6 months, ORCL stock is priced at 3924/3926 and you sell ”at the market”,
what is the ending account value, after satisfying the margin loan (ignore any interest on the
loan)? What is your rate of return on your investment?
Problem 3 short sale (Ch 3). Using the exact data in Problem 2 for your investment and ORCL
prices, compute the ending value and rate of return if you had executed a short sale of 1000
shares, and buy-to-cover, instead of a purchase and sale.
Problem 4 market value index {Ch ZOI. The S&P500 index closed on Friday at 2563.26. The
total market capitalization of all of the stocks in the index was equal to $19,505 million. If
next Friday, the market value of those 500 stocks is equal to $19,746, what will the S&P500
index value be?
