Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $130 per share. The initial margin requirement was 50%. (The margin

image text in transcribed
Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $130 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 $130 to $144.00, and the stock has paid a dividend of $22.00 per share. a. What is the remaining margin in the account? 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? O Yes O 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 References eBook & Resources Worksheet Leaming 112%

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

Finance Operations

Authors: Charles Finley

1st Edition

1491292423, 978-1491292426

More Books

Students also viewed these Finance questions

Question

Compare the height and slant height of a right cone.

Answered: 1 week ago