Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Oid Economy Traders opened an account to short-sell 1,000 shares of intemet Dreams at $35 per share. The initial margin requirement was 50%. (The margin

image text in transcribed
image text in transcribed
Oid Economy Traders opened an account to short-sell 1,000 shares of intemet Dreams at $35 per share. The initial margin requirement was 50%. (The margin account pays no interest) A year later, the price of Internet Dreams has risen from $35 to $41.50. and the stock has paid a dividend of $4.40 per share. Required: 0. What is the remaining margin in the account? b-1. What is the margin on the short position? (Round your answer to 2 decimal places.) b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin call? Yes No c. What is the rate of return on the investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

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_2

Step: 3

blur-text-image_3

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

The Global Financial Crisis What Have We Learnt

Authors: Steven Kates

1st Edition

0857934228, 978-0857934222

More Books

Students also viewed these Finance questions

Question

Set clear performance expectations.

Answered: 1 week ago

Question

List the common methods used in selecting human resources. page 254

Answered: 1 week ago