Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $60 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 $60 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 $60 to $69.50, and the stock has paid a dividend of $7.80 per share. a. What is the remaining margin in the account? S 12,700 Remaining margin b-1. What is the margin on the short position? (Round your answer to 2 decimal places.) Short margin % 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.) Rate of return %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started