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ABC Traders opened an account to short sell 700 shares of XYZ Company. The initial margin requirement was 60%. (The margin account pays no interest.)
ABC Traders opened an account to short sell 700 shares of XYZ Company. The initial margin requirement was 60%. (The margin account pays no interest.) A year later the price of XYZ Company has fallen from $40 to $33, and the stock has paid a dividend of $1.5 per share. Maintenance margin is 30%.
(a) Compute the remaining margin in the account
(a) Will ABC Traders receive a margin call?
(b) Compute the return on investment.
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