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Kai has $25,000 in his margin account. His broker pays 1% (continuously compounded) interest on cash balances. Kai sells 100 shares of JASA short at
Kai has $25,000 in his margin account. His broker pays 1% (continuously compounded) interest on cash balances. Kai sells 100 shares of JASA short at $175 / share. The broker charges commission of $0.01 per share, and charges 0.25% (cont. compounded) interest on the value of the stock loan. 1 year later, how much cash is in Kai's account? (Assume that interest on the stock loan is charged based on the initial value of the stock loan. In the real world, interest would be computed daily based on the value of the stock loan on that day.) O a. $42,882.32 O b. $42,969.92 O c. $42,499.00 O d. $42,500.00 O e. $42,926.12
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