You buy 500 shares of BHC stock at $80 a share on margin. The initial margin is 50% and the maintenance margin requirement is 30%. If the stock price drops to $60, what will be the actual margin in your account?
a. 67%
b. 50%
c. 33%
d. 25%
2. If a portfolio manager wanted to hedge the risk associated with a substantial downturn in the US stock market, which of the following would be an appropriate strategy to implement?
a. Sell off all foreign-owned securities within the portfolio
b. Sell S&P500 futures contracts
c. Purchase call options on currently held US stocks
d. Purchase more US stocks now