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Posted on Aug 21, 2024

Suppose that you sell short 1,000 shares of Xtel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account.

a: If you earn no interest on the funds in your margin account, what will your rate of return be after one year if Xtel stock is selling at: (i) $22, (ii) $20, (iii) $18? Assume no dividends are payed

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