Part 4

Intro The stock price of Google is $513. You have $10,000 to invest. The monthly interest rate is 0.3%. Part 1 Attempt 1/5 for 10 pts. You think the stock price will go down soon, and want to trade 20 shares. What should you do? Enter 20 for buying 20 shares (on margin if necessary), or -20 for selling or short-selling 20 shares. -20 Correct v You should short-sell 20 shares to benefit from a decrease in the stock price: -20. Part 2 Attempt 1/5 for 10 pts. If the initial margin is 50%, what is the minimum additional dollar amount that you have to deposit in your brokerage account? 5130 Correct Short-selling 20 shares gives us some cash, which must be kept in the brokerage account: Proceeds from short-selling = Number of shares * Stock price = 20 * 513 = 10,260 With an initial margin requirement of 50%, we have to add 50% of the proceeds from short-selling in the form of additional cash to the account: Extra cash = 50% * 10,260 = 5,130 Part 3 | Attempt 1/5 for 10 pts. What is your initial percentage margin (entered as a decimal number)? 0.50 Correct v Since we just calculated the amount of money that we had to put into the account to make the margin equal to the initial margin requirement of 50%, our initial margin is 0.5. Part 4 Attempt 1/5 for 9 pts. Two months later, the stock price is $533. Google paid a dividend of $9 per share just before the two months were over. What is your percentage margin (entered as a decimal number)