Question
Javier has sold short 2,400 shares of Omega Inc. at $42 per share. The initial margin requirement was 50% on the short sale. His broker
Javier has sold short 2,400 shares of Omega Inc. at $42 per share. The initial margin requirement was 50% on the short sale. His broker requires a 35% maintenance margin. Omega pays no dividends. Javier earns no interest on the funds in his margin account. What is the rate of return on the investment if the price of Omega stock changes from $42 to $37?
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
6th edition
9781305178045, 1285429648, 1305178041, 978-1285429649
