Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An investor sells 100 shares short at $52. The sale requires a margin deposit equal to 55 percent of the proceeds of the short sale.

An investor sells 100 shares short at $52. The sale requires a margin deposit equal to 55 percent of the proceeds of the short sale. The company paid a cash dividend of $1 per share after the investor sold the shares on short. If the investor covered the position at $46 (after the cash dividend was paid out), what was the percentage earned or lost on the investment?

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

Funding And Financing Transport Infrastructure

Authors: Athena Roumboutsos, Hans Voordijk, Aristeidis Pantelias

1st Edition

0367735792, 9780367735791

More Books

Students also viewed these Accounting questions