Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Old Economy Traders opened an account to short sell 2,200 shares of Internet Dreams at $64 per share. The initial margin requirement was 50%. (The

image text in transcribed

Old Economy Traders opened an account to short sell 2,200 shares of Internet Dreams at $64 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 $64 to $70, and the stock has paid a dividend of $2.00 per share. a. What is the remaining margin in the account? (Omit $ sign in your response.) Remaining margin $| b. If the maintenance margin requirement is 30%, will Old Economy receive a margin call? Yes 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.) Rate of return 0 %

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

Step: 3

blur-text-image

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

Financial Terms Dictionary Investment Terminology Explained

Authors: Thomas Herold, Wesley Crowder

1st Edition

1521725764, 978-1521725764

More Books

Students also viewed these Finance questions

Question

What is the relationship between humans and nature?

Answered: 1 week ago