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Question 2 Calculate the return assuming that shares are short-sold assuming an initial required margin of 40% and a maintenance margin of 25%. A) -33.46%
Question 2 Calculate the return assuming that shares are short-sold assuming an initial required margin of 40% and a maintenance margin of 25%. A) -33.46% B) -37.32% C) -51.48% D) -35.39% E) -42.9% Correct answer is E. Data below is applicable to questions 1 & 2. You have been approached by a trader that requires assistance on margin-buying and short-selling on Discovery Ltd.. He has provided you with the current Bid and Ask price of Discovery Ltd. as well as a forecast of the price in 1 month time (see table below). Assume a portfolio value/short position of R10 000.00: Bid Ask Today 1 Month R91.9 R106.6 R92.82 R107.67
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