1 SET 1 PRACTICE QUESTIONS Background Chapters 1-5 CHAPTER 1: 1. Risk is best thought of as a. the chance that the actual return will be zero or negative b. the chance that the actual return will differ from the expected return c. the chance that the expected return will be lower than what investors demand d. the chance that the expected return will be incorrectly estimated 2. Which of the following is INCORRECT about risk-averse investors? a. They always try to minimize their risk regardless of return. b. They will not seek risk for its own sake. c. They can buy very risky securities. d. They seek to earn a rate of return that is proportional to the risk taken. 3. In describing the investing tradeoff that investors face, which of the following statements is CORRECT? a. on an expected basis for the next year, the tradeoff can be upward or downward sloping b. over long periods of financial market history, such as 50 or more years, the tradeoff is downward sloping c. over recent historical periods of one or two years, the tradeoff can be upward sloping or downward sloping d. on an expected basis for the next 10 or 15 years, the tradeoff could be either upward sloping or downward sloping 4. Which of the following factual statements is INCORRECT? a. portfolio management is the first step in the investment decision process b. a passive investment strategy is designed to make few changes over time c. the Efficient Market Hypothesis states that the prices of securities reflect their economic value d. an active investment strategy seeks to change investment proportions and/or assets in the belief that profits can be made 5. Given the expected return--risk tradeoff that exists for investment decisions, which of the following financial assets would be expected to be highest on the tradeoff? a. AAA corporate bonds b. Treasury bonds c. blue-chip common stocks d. preferred stock 2 6. Ex post, the return-risk tradeoff available to investors a. can only be a flat line in return-risk space. b. can only be upward sloping in return-risk space. c. can only be downward sloping in return-risk space. d. could be downward sloping in return-risk space. 7. Intelligent investment decisions for any future period are based on a. the relation between realized return and risk b. the relation between expected return and risk c. expected return only d. a tradeoff between return and risk that is downward sloping 8. A Chartered Financial Analyst designation is a. A professional designation awarded by AIMR to candidates passing three levels of examinations involving important investments topics. b. a certification of a successful investing record used by professionals to attract business. c. a professional designation awarded by employers to employees meeting recognized standards of competency and conduct. d. a professional designation awarded by colleges upon successful completion of the proper exams. CHAPTER 2: 9. With regard to direct and indirect investing, choose the INCORRECT statement. a. Direct investing refers to the purchase of securities directly in one’s brokerage account b. Indirect investing refers to the purchase of investment companies, thereby letting the intermediary do the investing on behalf of the investment company owners c. Direct investing must be done by every investor since it is not possible to invest only indirectly d. Many investors do both direct and indirect investing 10. An example of a nonmarketable security is a. a Treasury bill b. a government savings bond c. a banker's acceptance d. commercial paper 11. Which of the following is not a money-market security? a. a Treasury bill b. money market deposit account c. a banker's acceptance d. commercial paper 3 12. Which of the following characteristics applies to the Treasury bill? a. sold at face value on a regular basis b. pays interest every six months c. has a face value of $1,000,000 d. sold at a discount on an auction basis weekly 13. The best definition of debt securities, based on the text, is that the term includes a. All bonds and preferred stocks b. Treasuries, agencies, municipals, and corporates c. Treasuries, agencies and corporates d. Corporate bonds and Treasury bonds only 14. Choose the INCORRECT statement with regard to Federal Agency Securities: a. they are not exempt from federal tax b. they typically trade less frequently than comparable Treasury bonds c. they have slightly less default risk than Treasuries because both the government and the agency guarantees them d. they typically have higher yields than Treasury securities of comparable maturity 15. With regard to bond ratings, which of the following statements is INCORRECT? a. The first four categories represent investment grade securities. b. A triple-A rated bond is guaranteed not to default c. Both corporates and municipals are rated d. Ratings are current opinions on the relative quality of bonds. 16. With regard to bond ratings, which of the following statements is INCORRECT? a. the first three categories are considered investment grade b. ratings reflect the quality of the bonds relative to each other c. corporates and municipals are rated d. ratings reflect the relative probability of default 17. Using S&P bond ratings, you are trying to put together a list of 4 different corporate bonds, all with the same maturity, with their current rates. One bond is rated AAA, one is rated AA, one is rated A, and one is rated BBB. Which of the following rates would be associated with the AA-rated bonds? a. 6% b. 6.5% c. 7.9% d. 7.1% 4 18. With regard to Vanguard’s Tax Exempt Bond Funds, choose the CORRECT statement. a. The long-term bond fund over a long period of years should return less than the short-term bond fund because it has larger capital losses b. The money market fund’s Total Return is comprised of the capital return and the income return c. The long-term portfolio should show capital returns that have a wider variance than the capital returns for the short-term portfolio, and because of this the average return over time should be expected to be less d. The short-term portfolio over a period of years can show both positive and negative capital returns 19. Calculate TEY for an investor in the 35% marginal tax bracket holding a 5.5% municipal bond a. 10.76% b. 15.15% c. 9.11% d. none of the above 20. Consider a 30-year bond with a tax-exempt yield of 3.7% while 30-year Treasury bonds are yielding 5.6%. For an investor in the 35% tax bracket, the TEY for this bond a. is less than the comparable Treasury bond yield. b. is greater than the comparable Treasury bond yield. c. would be less attractive if the tax rate were higher. d. such that an investor would be indifferent between these two alternatives. 21. With regard to securization, choose the INCORRECT statement.. a. It refers to the transformation of illiquid loans into less risky securities. b. The less risky securities resulting from securitization are referred to as assetbacked securities. c. Securitization works best when packaged loans are heterogeneous, so that returns are more variable. d. Ginnie Mae issues are one example of securitization 22. Which of the following is CORRECT about preferred stock? a. It has a specified life. b. It has a price that does not fluctuate. c. It is technically a debt security. d. It occupies a middle position between bonds and common stock both in terms of priority of payment of income and in case of liquidation. 5 23. The common stockholder a. is not guaranteed a specified return b. is senior to (that is, ranks above) debt holders in terms of payment c. takes relatively small risk in any given year d. has priority in being paid off in case of bankruptcy 24. The common stockholder a. is a creditor of the company b. as the owner, takes relatively little risk c. is senior to the bondholders in terms of payment d. takes greater risk than the other claimants of the company in the hope of greater returns 25. Which of the following statements about common stock is CORRECT? a. it has a specified return in the form of dividends that must be paid annually b. stockholders have specific promises to receive cash from the corporation because of the dividends c. common stock has no specified return that must be paid d. common stockholders are paid ahead of the preferred stockholders. 26. A warrant is: a. a very short-term option on the underlying stock b. created by investors as a play on a common stock c. a long-term option on its underlying common, issued by firms d. the right to sell shares of stock at a stated price within a stated time 27. Which of the following is not a corporate-created equity-derivative security? a. puts and calls b. rights c. convertible bonds d. warrants 28. Which of the following is an investor-created equity-derivative security? a. convertible bonds b. warrants c. commercial paper d. puts and calls 29. A call is a. a short-term option to buy at a specified price within a specified time b. a short-term option to sell at a specified price within a specified time c. a long-term option to buy issued by a corporation d. a short-term option to buy stock issued by a corporation 6 30. Which of the following statements about puts and calls is INCORRECT? a. the writer of a call believes the price of the stock will remain flat or decline b. the writer of a put believes the price of the stock will remain flat or decline c, the buyer of a put believes that the price of the stock will decline d. the buyer of a call believes that the price of the stock will rise 31. A futures contract a. is always exercised by the buyer. b. is typically closed out by offset. c. is solely a vehicle for speculative purposes. d. requires an initial margin of 20% or more to be paid. 32. The riskiest type of security to investors is? a. corporate bond b. common stock c. long-term warrant d. call option CHAPTER 3: 33. Which of the following statements is CORRECT about investment companies? a. they are regulated by states exclusively, and not the SEC b. investment companies include unit investment trusts, open-end funds and closedend funds c. total investment company assets are less than $1 trillion d. the dominant form of investment company is the closed-end fund 34. With regard to mutual funds, choose the CORRECT statement a. money market funds are a form of mutual funds b. all mutual funds typically charge a load fee c. mutual funds can be bought and sold anytime the markets are open d. some mutual funds trade on exchanges 35. All open-end investment companies a. typically charge a management fee and may or may not charge a load fee b. charge a load fee of some type c. have shares that are valued at the NAV but are priced on the basis of whatever investors are willing to pay for them d. generally charge a management fee, a load fee, a maintenance fee, and a redemption fee 7 36. All open-end investment companies a. charge a load fee b. charge a management fee and a load fee c. have shares that are valued at the NAV but are priced on the basis of whatever investors are willing to pay for them d. redeem their shares on demand 37. With regard to mutual funds , we can conclude a. closed-end funds have more assets than do mutual funds b. subsequent performance is often not predictable on the basis of recent performance c. the average expense ratio for equity mutual funds is approximately 1 percent d. a mutual fund with 3 classes of shares has 3 different portfolios 38. Mutual funds include a. only bond and stock funds b. money market funds, stock funds, and bond and income funds c. only taxable bond funds, stock funds, and money market funds d. only stock funds and bond and income funds 39. With regard to mutual funds , we can conclude a. assets grew sevenfold in the 1990s, from a base of about $1 trillion b. the average expense ratio for equity mutual funds is approximately 1 percent c. a mutual fund with 3 classes of shares has 3 different portfolios d. money market funds have a sales (load) charge but not a redemption charge. 40. Which of the following mutual funds has a constant share price? a. a bond fund b. an index fund c. a money market fund d. a hybrid fund 41. Which of the following statements is CORRECT about classes of mutual fund shares? a. The A shares of a particular load mutual fund charge a redemption fee b. The B shares of this fund charge an upfront sales charge c. The C shares charge a higher annual operating expense than does the A shares d. The B shares charge a higher annual operating expense plus an upfront sales charge 8 42. The average expense ratio for bond mutual funds is approximately: a. 1.79% b. 1.41% c. 0.69% d. 1.00% 43. Fidelity’s Equity-Income Fund is a. an example of a mutual fund classified as an aggressive growth fund. b. closed-end fund. c. an open-end investment company. d. an index fund. 44. Money market funds a. Have a sales (load) charge but not a redemption charge. b. Are closed-end investment companies. c. By law can hold only taxable securities. d. Charge their investors a management fee 45. With regard to the net asset value (per share), NAV, of a mutual fund, choose the CORRECT statement. a. b. c. d. it is computed several times daily for all mutual funds it is computed by calculating the total market value of the securities in the portfolio it seldom changes for the typical mutual fund it is the per share value of the portfolio of securities held by the mutual fund 46. The NAV for the Zany Fund at the beginning of the year is $55.46. During the year the fund earns net investment income of $0.92 and net realized and unrealized gains of $0.73. It also pays out $0.72 from net investment income and $2.12 from net realized gains during the year. The NAV at the end of the year for the Zany fund is a. $54.27 b. $57.11 c. $52.62 d. $56.39 47. Which of the following ETFs is a portfolio representing the Dow Jones Industrial Index? a. Qubes b. Diamonds c. VIPERS d. Spiders 9 48. ETFs a. b. c. d. mostly trade on the Amex mostly trade on the NYSE have higher expense ratios than index mutual funds cannot be sold short but can be bought on margin 49. The average expense ratio for equity mutual funds has been approximately: a. 1.79% b. 1.5% c. 0.69% d. 1.19% 50. With regard to mutual funds, choose the INCORRECT statement a. there are currently thousands of mutual funds b. mutual funds are regulated under the Investment Company Act of 1940 c. mutual fund assets currently amount to several trillion dollars d. some mutual funds trade on exchanges 51. Which of the following statement is CORRECT about closed-end investment companies? a. they can be referred to as ETFs b. the NAV is typically unequal to the market price of the closed-end shares c. investors buy and redeem shares through the company d. there are more closed-end companies than open-end companies Assume that the Do Good mutual fund annual returns for 4 consecutive years are 10.3% for 1999, - 13.2% for 2000, +14.3% for 2001, and -1.9% for 2002. Answer the next 3 questions. 52. Given an initial investment of $10,000 at the beginning of 1999, calculate terminal wealth at the end of 2001. Use three decimal places to do the calculations a. $8,000 b. $9,755.20 c. $10,943.13 d. none of the above 53. Assume an investment of $10,000 at the beginning of 2001. Calculate terminal wealth at the end of 2002. a. $7,680 b. $7,807.27 c. $11,212.83 d. none of the above 10 54. Given a starting amount of $10,000, the terminal wealth for an investor who was in this fund for all 4 years would be determined as: a. $10,000 plus gains of $103 and $143 less losses of $132 and $19. b. The product of $10,943.13 and .981 c. $10,000 plus the gains and losses netted together algebraically d $10,735.21 e. both b and d are correct Assume that the HighTech mutual fund has an Average Annual Total Return over a 5-year period of 11.5%. For Year 1 of this five-year period, the Cumulative Total Return was 10.2% Answer the next 2 questions. 55. Calculate the Cumulative Total Return for HighTech. a. 66.1% b. 72.3% c. 52% d. none of the above 56. Determine the actual Total Return for HighTech for Year 1 of this 5-year period. a. 10.2% b. 11.5% c. 14.5% d. none of the above 57. Assume that HighTech earns exactly 10% a year for the first three years of this 5-year period. For an investor starting with $10,000 at the beginning of the first year, the terminal wealth for this investor at the end of the third year would be. a. $10,000 plus gains of $300 each year for a total of $10,900 b. $10,000 (1.10)3 c. $10,000 (1.10) (1.10) (1.10) d. both b and c are correct CHAPTER 4: 58. With regard to markets, choose the CORRECT statement: a. Secondary markets exist for the trading of new securities b. Investment bankers often underwrite new issues by purchasing the securities c. If the issuer is selling securities for the first time, these are referred to as seasoned issues d. All secondary equity markets are auction markets 11 59. Which of the following statements is CORRECT concerning the equity markets? a. during the 1990s, the markets suffered a number of bad years b. the markets rose for 5 consecutive years through 1999, and then declined for 3 consecutive years c the markets rose for 4 consecutive years, and then declined two years in a row d. the markets declined for four consecutive years during 1999-2002 60. With regard to the size of equity markets, which statement is CORRECT? a. Nasdaq has less companies listed on it than does the NYSE b. The Amex has only approximately 1,000 stocks listed c. The NYSE has more than 4000 stocks listed d. The total market value of all NYSE stocks exceeds the total market value of all Nasdaq stocks 61. The NYSE is best described as a. an agency auction market b. the premier primary market in the world c. a negotiated market where blue chip stocks trade d. an auction market based on the dealer system as opposed to the specialist system 62. Nasdaq is best described as a. an agency auction market b. a primary market for smaller securities c. a negotiated market consisting of a network of dealers d. an organized exchange with a physical location 63. Which of the following statements is INCORRECT in contrasting Nasdaq vs. the NYSE? a. Nasdaq is a negotiated market while the NYSE is an agency auction market b. Nasdaq is an example of an agency auction market c. The NYSE is an agency auction market while Nasdaq is a computerized network of dealers d. The Nasdaq Stock Market is one of three major marketplaces in the United States 64. Which of the following statements about the three major financial markets ais CORRECT? a. Nasdaq stocks are unlisted stocks b. Listed stocks cannot trade on the regional exchanges c. Over-the-counter stocks can trade on the OTC Bulletin Board or on the Pink Sheets d. NYSE and Amex stocks are listed but Nasdaq stocks are not 12 65. NASDAQ National Market System is a. a self-regulating body of brokers and dealers that oversees Nasdaq and OTC practices. b. a combination of specialists in the auction markets and market makers in Nasdaq stocks, combined with the up-to-the-minute reporting of trades. c. a combination of specialists in Nasdaq stocks and the up-to-minute reporting of trades. d. a combination of the competing market makers in Nasdaq stocks and a reporting of trades similar to that which occurs on the NYSE. 66. SuperDOT is an electronic order routing system used a. on Nasdaq b. on Instinet c. in the third market d. on the NYSE 67. ECNs a. have extended evening trading hours for many investors so that they can now trade after hours b. have links to all discount brokers now doing business c pose no real threat to either the NYSE or to Nasdaq d. are not likely to have much of an impact on financial markets because the NYSE and Nasdaq have entrenched positions 68. One of the big advantages of Instinet for institutional investors is a. the help of brokers who act to bring two institutions together b. low commissions of about 6 or 7 cents a share c. being identified as the party buying or selling, which helps the institution to make favorable trades d. a combination of low costs and anonymous trading 69. Which of the following statements concerning the current status of the markets is INCORRECT? a. The Dow Jones Industrial Index has reached highs in the past of more than 11,000 b. The S&P 500 Index is currently around 600 c. The American Stock Exchange accounts for roughly 3-4% of total volume traded among all markets d. Dow Jones points are not equal to dollars 70. When it comes to trading bonds a. most bonds are traded on exchanges although some are traded over the counter b. most bonds are traded over the counter although a few are traded on exchanges c. the secondary market for agency securities will be quite poor relative to corporates and municipals d. no federal government bonds are traded over the counter 13 71. With regard to a national market system (NMS) for the trading of securities, a. The Act of 1975 provided a detailed blueprint of its final form b. We have reached the final form of a NMS, and little change is expected c. We are evolving towards some type of NMS, but we do not know what the final form will look like d. The Intermarket Trading System will be the major component of a NMS in the future 72. Which of the following statements is CORRECT? a. The Nasdaq stock market has continued to grow as a marketplace, and now does even more business than in 2000 b. Being as entrenched and successful as it is, the NYSE is unlikely to make any major changes at this point c. ECNs have had a tremendous impact on Nasdaq d. NYSE and Amex stocks are listed but Nasdaq stocks are not 73. The DJIA a. has a divisor of 30 b. is a capitalization-weighted index c. has a base number set to 10 d. is biased against growth stocks 74. The Dow-Jones Industrial Average a. is an index-number concept b. is a price-weighted series c. is a broad-based measure of the stock market as a whole d. is a market value weighted series 75. With regard to the S&P 500 Index, choose the CORRECT statement. a. It is less frequently used than the DJIA by institutional investors b. A current value of 10000 for this index would indicate that the average price of the 500 stocks in the index is 100 times the base number c. It is a price-weighted index of 500 large stocks d. Stock splits and dividends are automatically accounted for in its calculation 76. The Russell 1000 Index is a a. price-weighted market index used to measure small cap stocks b. value-weighted market index used to measure large cap stocks c. value-weighted index used to measure small cap stocks d. price-weighted index used to measure mid-cap stocks 14 77. The Russell 2000 is a a. price-weighted market index used to measure small cap stocks b. value-weighted market index used to measure large and small cap stocks c. value-weighted index used to measure small cap stocks d. price-weighted index used to measure mid-cap stocks 78. With regard to market indexes, choose the INCORRECT statement a. The Dow Jones World Stock Index is a price-weighted index b. The Dow Jones Equity Market Index is capitalization-weighted c. The Russell indexes are capitalization-weighted d. The S&P indexes are capitalization-weighted 79. On one day the Dow Jones Industrial Average rose about 225 points. The divisor for this index was .10 at this time. GM went up about $7.50 on that day. Based on this information, choose the CORRECT statement. a. Investors holding a diversified portfolio of stocks gained about $150 that day. b. GM accounted for about 7.50/225 of the rise. c. GM had only a very small effect on the index that day d. GM alone accounted for about one-third of the rise in the Dow for that day CHAPTER 5: 80. With regard to types of orders, select the INCORRECT statement a. a market order ensures that a transaction will be carried out b. stop orders specify a specific price that the investor is assured of receiving c. market orders are the most common type of order on the NYSE d. a limit order removes all doubt about the price to be received in a transaction 81. With regard to types of orders, select the CORRECT statement a. a limit order ensures that a transaction will be carried out b. stop orders specify a certain price that the investor is assured of receiving c. market orders are the most common type of order on the NYSE d. a market order removes all doubt about the price to be received in a transaction 82. Types of brokerage accounts include: a. accounts from full-service brokers and discount brokers b. wrap accounts and asset management accounts c. accounts from full-service brokers and discount brokers, and asset management accounts d. a and b 15 Assume that Intel is trading around $92. The bid price is 91 7/8, and the asked price is $92. You own some Intel shares and are considering various trades of Intel at this time. Use this information to answer the next two questions regarding types of orders: 83. 84. Assume you are unwilling to pay more than 91 1/2 for Intel but would like to buy some more at that price. In order to attempt to purchase at this price you should place which type of order? a. a market order because it assures you of buying at this price b. a market order when the stock trades at 91 1/2 because that will assure you of getting Intel at that price when your order goes in and is executed c. a stop order at 91 1/2 d. a limit order to buy at 91 ½ You instruct your broker to sell your existing shares at a price that will assure you of receiving at least 93. This is which type of order? a. a market order b. a limit order to sell c. a stop order to buy d. a stop order to sell 85. The NASD is a. a major government agency regulating the over-the-counter market b. a branch of the SEC that licenses brokers c. a self-regulating body that oversees the daily operations of the NYSE and Nasdaq d. a self-regulating body that oversees brokers and the Nasdaq market 86. The Securities and Exchange Commission (SEC) a. is an independent, quasi-judicial agency of the U. S. government b. was created by the Securities Act of 1933 c. has the power to disapprove securities for lack of merit d. has no jurisdiction over the self-imposed rules and regulations of the NYSE 87. The Securities Act of 1933 a. ensures full disclosure of information with respect to new security issues b. requires the issuer of a new security to obtain the approval of the SEC c. ensures the fair trading of securities on the secondary market d. provides some assurance to investors as to the quality of the new issue 88. The Securities Exchange Act of 1934 a. extended the disclosure requirements to the secondary market b. established the SEC c. required an issuer to register an issue with full disclosure d. a and b 16 89. With regard to margin trading: a. b. c. d. 90. If the initial margin requirement is 60%, and the maintenance margin is 30%, an investor buying on margin 200 shares of a stock selling at $100 must put up, to buy the stock a. b. c. d. 91. 16.67% 25% 10% none of the above If the initial margin requirement is 45% and the maintenance margin requirement is 30%, what is the most that could be borrowed in order to buy the stock by an investor who wishes to purchase 100 shares of the stock which has a current price of $16.75? a. b. c. d. 93. $12,000 $ 8,000 $10,000 none of the above An investor buys 100 shares of a stock at $200 per share on 60% margin. The stock goes to $220. Ignoring all costs of transacting, the percentage return on investment is a. b. c. d. 92. The NYSE establishes the initial margin The maintenance margin is set by the Board of Governors of the Federal Reserve System The initial margin is set by the Federal Reserve and the maintenance margin is set by brokers and the exchanges The maintenance margin requirement has been 50% for many years $117.25 $837.50 $921.25 $753.75 If the initial margin requirement is 60 percent, and a stock sells for $50, an investor with $3000 of his own who wants to use the full $3000 in a margin transaction a. b. c. d. can purchase 125 shares. can purchase a maximum of 100 shares by borrowing $2000 from the broker. can purchase 80 shares. can purchase 200 shares by borrowing $3000 from the broker. 17 94. If the initial margin requirement is 40 percent, and a stock sells for $40, an investor with $2000 of his own who wants to use the full $2000 in a margin transaction a. b. c. d. 95. Which of the following statements about short sales is CORRECT? a. b. c. d. 96. a loss of $2000 a gain of $3000 a loss of $3000 none of the above Which of the following statements about short selling is CORRECT a. b. c. d. 98. short sales have a specified time limit short sales on the NYSE are permitted only on an uptick short sellers need only a cash account to sell short the short seller incurs no costs other than brokerage costs on the typical dividendpaying NYSE stock You sell short 100 shares of stock at $150 per share. If the stock moves to $180, you have a. b. c. d. 97. can purchase 125 shares. can purchase a maximum of 100 shares by borrowing $2000 from the broker. can purchase 100 shares by borrowing $3000 from the broker can purchase 200 shares by borrowing $3000 from the broker. short position results from selling first and buying back later. Dividends on stock sold short can be ignored by the short seller. Short sales on the NYSE are permitted on upticks or downticks. Buying calls is a substitute for selling short. You sell short 100 shares of stock at $150 per share. Which of the following courses of action is possible in this situation? a. b. c. d. the price of the stock could decline, and you would have a paper gain until you closed out the transaction, at which time you would have a realized gain the price of the stock could rise, and you would have a paper loss; if you bought the stock back at the higher price and covered the short sale, you would have a realized loss as long as your broker allows you to keep the short position open, no matter how long, you may experience a series of paper gains and losses a, b, and c are all correct 18 99. You buy 100 shares of Polyglot on 50% margin at $40 per share. The broker charges an annual 10% interest rate on margin loans, and commissions are 1% of the total stock value on both the purchase and the sale. At year end you receive a $1.00 per share dividend and sell the stock for 42. What is your rate of return on investment (as calculated on your actual total cash outlay to make the investment)? a. b. c. d. e. 100. –35.02% –25.02% 14.74% 2.84% none of the above Assume you sell 100 shares of X Corp short at $40 in March. When you open your brokerage account statement in April, having taken no actions in your account for the month, you see that the price of X Corp is reported at $65. Analyzing gains and losses in your portfolio, at this point, ignoring brokerage costs and margin costs, a. b. c. d. you have an actual loss of $2500 you have a gain of $2500 you have a realized loss of $2500 you have a paper loss of $2500