Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Old Economy Traders opened an account to short sell 2,700 shares of Internet Dreams at $75 per share. The initial margin requirement was 50%. (The

image text in transcribed

Old Economy Traders opened an account to short sell 2,700 shares of Internet Dreams at $75 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 $75 to $85, and the stock has paid a dividend of $1.50 per share. a. What is the remaining margin in the account? (Round your answer to the nearest whole number.) Remaining margin b. If the maintenance margin requirement is 30%, will Old Economy receive a margin call? No Yes c. What is the rate of return on the investment? (Round your answer to 2 decimal places. Negative value should be indicated by a minus sign.) Rate of return

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

Property Finance

Authors: Giacomo Morri, Antonio Mazza

1st Edition

1118764404, 978-1118764404

More Books

Students also viewed these Finance questions

Question

Analyse the various techniques of training and learning.

Answered: 1 week ago