Question $6(4$ marks$)$

You bought a stock for $$20$ and sold it for $$59\mathrm{.}72$ after six years. Determine the annual rate of return.

$(4$ marks$)$

Question $7(30$ marks$)$

David sells short $300$ shares of DYB Ltd$.$ that are currently selling at $$25$ per share with Smart Bright Securities. Smart Bright Securities imposes $60\%$ margin on the short sale and requires a $25\%$ maintenance margin. Assume that no interest earned on the margin account, and the DYB does not pay any dividends.

Required:

a$.$ Construct a statement of financial position on the date of short sell.

$(10$ marks$)$

b$.$ Determine the price of DYB that David will receive a margin call.

$(4$ marks$)$

c$.$ If it is subject to margin call, construct a statement of financial position assume that he fulfils the margin call requirement. You are required to state the additional amount contributed.

$(12$ marks$)$

d$.$ Advise David how to place order if he does not intend to maintain the margin account.

$(4$ marks$)$

End of Assignment