1. Imagine you have a portfolio which consists of 60% stocks, 25% bonds, and 15% in a CD. If the expected returns of your assets are 10% (stocks), 6%(bonds) and 0.5% (CD), what is the expected return of your portfolio?
A. 5.45%
B. 6%
C. 7.58%
D. 8.85%
2. Imagine you buy 1,000 shares of ABC on 40% margin when the stock is trading at $30. The call money rate is 8% with a 3% spread. Six month later, you sell all your shares when the stock is trading at $31 dollars (with no dividends paid). What is your annualized total return?
A. 0.60%
B. -4.22%
C. 17.36%
D. 6.78%