Question
Suppose that you sell short 1000 shares of Spotify at a current price of 20 $ per share and you give your broker 15.000 $
Suppose that you sell short 1000 shares of Spotify at a current price of 20 $ per share and you give your broker 15.000 $ to stablish your margin account. a. If you earn no interest in your banking account; what will be your rate of return if after 1 year the stock I selling at: i. 22 ii. 20 iii. 18 b. If the maintenance margin in 25%; How high can Spotifys price rise before you get a margin call? c. Reffered to parts a and b. Now assume that Spotify has paid a year-end dividend of 1$ per share. The prices of part a should be interpreted, that is, prices after dividend has been paid
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