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Flag A speculator sells a stock short for $71 a share. The company pays a $2.50 annual cash dividend. After a year has passed, the
Flag A speculator sells a stock short for $71 a share. The company pays a $2.50 annual cash dividend. After a year has passed, the seller covers the short position at $63. a) If the margin requirement is 55 percent, what is the percentage return earned on the investment? b). Redo the calculations, assuming the price of the stock is $78 when the investor closes the position. c) Based on your calculations to both scenarios, what generalization can be inferred?
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