Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Old Economy Traders opened an account to short-sell 2,600 shares of Internet Dreams at $73 per share. The initial margin requirement was 50%. (The margin
Old Economy Traders opened an account to short-sell 2,600 shares of Internet Dreams at $73 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 $73 to $80, and the stock has paid a dividend of $4.00 per share. Required: a. What is the remaining margin in the account? b. If the maintenance margin requirement is 30%, will Old Economy receive a margin call? c. What is the rate of return on the short position (treating the initial margin as the amount invested)? Complete this question by entering your answers in the tabs below. What is the remaining margin in the account
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