Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A stock is trading in the market at $471. An investor borrows 164 shares and sells them into the market. Interest rates are 4.27% and
A stock is trading in the market at $471. An investor borrows 164 shares and sells them into the market. Interest rates are 4.27% and the borrow cost is 0.34%. Both are quoted as continuously compounded. The investor waits 15 days and buys back the shares at $332. Ignoring the fluctuating collateral position how much money did he make in total on the transaction? You need to compute both the profits/losses on the shares as well as the interest on the collateral. Round your answer to two decimal places.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started