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3.) (8 points) You sold short 500 shares of a stock for $75 per share. Your broker's initial margin requirement is 60% for this stock.
3.) (8 points) You sold short 500 shares of a stock for $75 per share. Your broker's initial margin requirement is 60% for this stock. The broker's maintenance margin requirement is 30%. You initially want to put up as little equity as possible to support the short sale. If one year later you covered your short position at $62 per share, what percent rate of return will you receive on your investment if the company stock that you shorted paid total dividends of $0.70 per share during the time you held the stock short? Assume there are no broker transaction charges. 3.) (8 points) You sold short 500 shares of a stock for $75 per share. Your broker's initial margin requirement is 60% for this stock. The broker's maintenance margin requirement is 30%. You initially want to put up as little equity as possible to support the short sale. If one year later you covered your short position at $62 per share, what percent rate of return will you receive on your investment if the company stock that you shorted paid total dividends of $0.70 per share during the time you held the stock short? Assume there are no broker transaction charges
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