Problem 3-04

You decide to sell short 300 shares of Charlotte Horse Farms when it is selling at its yearly high of $49. Your broker tells you that your margin requirement is 65 percent and that the commission on the purchase is $525. While you are short the stock, Charlotte pays a $2.35 per share dividend. At the end of one year, you buy 300 shares of Charlotte at $34 to close out your position and are charged a commission of $520 and 9 percent interest on the money borrowed. What is your rate of return on the investment? Do not round intermediate calculations. Round your answer to two decimal places.

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