Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(1-2 Old Economy Traders opened an account to short sell 1,000 shares at the price per share of $40 of Internet Dreams. The initial margin

image text in transcribed

(1-2 Old Economy Traders opened an account to short sell 1,000 shares at the price per share of $40 of Internet Dreams. The initial margin requirement was 50%. (The margin account pays 3% interest rate.) A year later, the price of Internet Dreams has risen from $40 to $35, and the stock has paid a dividend of $2 per share. 1. If the maintenance margin requirement is 25%, will Old Economy receive a margin call? 2. What is the rate of return on the investment? (3-4) Following table is a Treasury bill quote for 2019-2020. Answer following questions. Treasury bills bid maturity ask chg Nov-2019 Jan-2020 Mar-2020 July-2020 Sep-2020 Days to maturity 73 100 170 310 340 0.1 0.12 0.15 0.17 0.18 0.05 0.07 0.1 0.18 0.16 0.05 0 0 -0.02 0 3. If you want to purchase a nov-2019 expiration T-bill with face value of $1,000 , how much it will cost? 9 4. If you can choose between Sep-2020 and July-2020 expiration date T-bills, which one would make you a better profit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cases In Healthcare Finance

Authors: Louis C. Gapenski

3rd Edition

1567932444, 9781567932447

More Books

Students also viewed these Finance questions

Question

Why does dew form on the ground during clear, calm summer nights?

Answered: 1 week ago