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Old economy traders opened an account to short sell 1000 shares of XYZ Company at $ 50 a share. The initial margin requirement is 55%.
Old economy traders opened an account to short sell 1000 shares of XYZ Company at $ 50 a share. The initial margin requirement is 55%. A year later the price of XYZ Company rises to $65 a share and stock has paid a dividend of $5 per share.
a) What is the remaining margin in the account?
b) If the maintenance margin requirement is 30%, will Old Economy receive a margin call?
c) What is the rate of return on the investment?
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