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Suppose that you sell short 250 shares of Weston (WN), currently selling for $80 per share, and give your broker $15,000 to establish your margin
Suppose that you sell short 250 shares of Weston (WN), currently selling for $80 per share, and give your broker $15,000 to establish your margin account. a. If you earn no interest on the funds on your margin account, what will be your rate of return after one year if WN stock is selling at $88; ( $80(II) $72? Assume that WN pays no dividends. (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) (i) Rate of return (ii) Rate of return (iii) Rate of return b. If the minimum margin is 30%, how high can WN's price rise before Omit $ sign in your response.) rgin call? (Round your answer to 2 decimal places. Margin call will be made at price $0 or higher c. Redo parts (a) and (b), now assuming that WN's dividend (paid at year-end) is $2 per share a minus sign. Round your answers to 2 decimal places. Omit S sign in your response.) (Negative values should be indicated by (i) Rate of return (si) Rate of return (11) Rate of return
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