Question
Please explain in excel I am very stuck. The price of a stock is $85.24, your broker is currently charging you 8.25% as a base
Please explain in excel I am very stuck.
The price of a stock is $85.24, your broker is currently charging you 8.25% as a base rate. the graph below is how the brokers rate will change based on a dollar ammount. The current short sale price is also 85.24$
a. You purchase 1,000 shares of your company on 50% margin. Go to Finance.yahoo.com to find your purchase price. Please specify the exact date you conduct this transaction and the corresponding price on that date. Ignoring transaction costs, how much will you need to borrow? If you keep your investment for 1 year, how much will you pay in interest assuming the margin rate stays the same? What does the stock price have to be in 1 year for you break even on your investments? Calculate and plot your potential net profits/losses on this position as the price changes by -90%, -80%, -70%, -60%, -50%, -40%, -30%, -20%, -10%, +10%, +20%, +30%, +40%, +50%, +60%, +70%, +80%, +90%.
b. You short 1,000 shares of your company on 50% margin. Go to Finance.yahoo.com to find your short sale price. Please specify the exact date you conduct this transaction and the corresponding price on that date. Calculate and plot your potential net profits/losses on this position as the price changes by -90%, -80%, -70%, -60%, -50%, -40%, -30%, -20%, -10%, +10%, +20%, +30%, +40%, +50%, +60%, +70%, +80%, +90%.
c. Obtain the data on the short sale ratios as a percentage of float and as a percentage of shares outstanding from Finance.Yahoo for the latest month and for the preceding month. Calculate the percentage changes in the two ratios over the month. According to what you learn from chapter 3 about short sale, what do the changes imply to you?
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