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Old Economy Traders opened an account to short$-$sell $2,000$ shares of Internet Dreams at $$60$ per share. The initial margin requirement was $50\%.($The margin account pays no interest.$)$ A year later, the price of Internet Dreams has risen from $$60$ to $$70,$ and the stock has paid a dividend of $$4\mathrm{.}00$ per share.

Required:

a$.$ What is the remaining margin in the account?

b$.$ If the maintenance margin requirement is $30\%,$ will Old Economy receive a margin call?

c$.$ What is the rate of return on the short position $($treating the initial margin as the amount invested$)?$

Complete this question by entering your answers in the tabs below. $$

Required B

Required $C$

What is the remaining margin in the account?

$\backslash$table$[[$Remaining margin,$$,32,000]]$

You are bullish on Telecom stock. The current market price is $$20$ per share, and you have $$5,900$ of your own to invest. You borrow an additional $$5,900$ from your broker at an interest rate of $9\%$ per year and invest $$11,800$ in the stock.

Required:

a$.$ What will be your rate of return if the price of Telecom stock goes up by $20\%$ during the next year? The stock currently pays no dividends.

b$.$ How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is $40\%?$ Assume the price fall happens immediately.

Complete this question by entering your answers in the tabs below.

Required $A$

Required B

What will be your rate of return if the price of Telecom stock goes up by $20\%$ during the next year? The stock currently pays no dividends.

Note: Negative value should be indicated by a minus sign. Enter your answer as a percent rounded to the nearest whole number.

Show less $4$

$\backslash$table$[[$Rate of return,$109,\%$

You are bullish on Telecom stock. The current market price is $$20$ per share, and you have $$5,900$ of your own to invest. You borrow an additional $$5,900$ from your broker at an interest rate of $9\%$ per year and invest $$11,800$ in the stock.

Required:

a$.$ What will be your rate of return if the price of Telecom stock goes up by $20\%$ during the next year? The stock currently pays no dividends.

b$.$ How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is $40\%?$ Assume the price fall happens immediately.

Answer is not complete.

Complete this question by entering your answers in the tabs below.

Required $A$

Requirtsi B

How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is $40\%?$ Assume the price fall happens immediately.

Note: Round your answer to $2$ decimal places.

Margin call will be made at price