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New Economy Traders opened an account to short sell 2,500 shares of Internet Hopes plc. The initial margin requirement was 50%. (The margin account pays
New Economy Traders opened an account to short sell 2,500 shares of Internet Hopes plc. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Hopes plc. has risen from 70 to 80, and the stock has paid a dividend of 3.5 per share. i) What is the remaining margin in the account? ii) If the maintenance margin requirement is 30%, will New Economy receive a margin call? iii) What is the rate of return on the investment?
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