1. You purchased 1000 shares of CSCO common stock on margin at $19 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin.
a. $12.86
b. $15.75
c. $19.67
d. $13.57
2. U.S Treasury bills are paying about 0.2 percent, and the estimated market risk premium (based on large common stocks) is about 8 percent. Apple (AAPL) has an estimated beta of 1.44. Using the SML approach, what's the return on equity of Apple stock?
A. 11.72%
B. 11.32%
C. 11 %
D. 10.32 %