Answered step by step
Verified Expert Solution
Link Copied!

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

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

Personal Finance For Dummies

Authors: Eric Tyson

9th Edition

1119517893, 978-1119517894

More Books

Students also viewed these Finance questions

Question

What advice would you provide to Jennifer?

Answered: 1 week ago

Question

What are the issues of concern for each of the affected parties?

Answered: 1 week ago