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Suppose that you sell short 250 shares of Richards Packaging Income Trust, which is currently trading for $80 per share. You also give your broker
Suppose that you sell short 250 shares of Richards Packaging Income Trust, which is currently trading for $80 per share. You also give your broker $15,000 to open a margin account. a. Suppose you earn no interest on the money in your margin account, what will be your one year holding period return if RPI is trading at (i) $88; (ii) $80; (iii) $72? Assume that RPI pays no dividends. b. If the minimum margin is 30 percent, what is the critical price that can trigger a margin call
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