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Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $40 per share. The initial margin requirement was 50%. (The margin
Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $40 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 $40 to $50, and the stock has paid a dividend of $2 per share. a. What is the remaining equity in the account? Remaining equity b-1. What is the percentage margin on the short position? Percentage margin b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin call? O Yes O No What is the rate of return on the investment? (Negative value should be indicated by a minus sign.) c. Rate of return
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