Question
You believe the price of Freeze Frame Co. stock is going to fall, so you short 650 shares at a price of $63. The initial
You believe the price of Freeze Frame Co. stock is going to fall, so you short 650 shares at a price of $63. The initial margin is 55 percent. Ignore dividends. a. Construct the equity balance sheet for the original trade. (Input all amounts as positive values.) b-1. Construct an equity balance sheet for a stock price of $59 per share. (Input all amounts as positive values.) b-2. What is your margin? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b-3. What is your effective annual return if you cover your short position at this price in four months? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c-1. Construct an equity balance sheet for a stock price of $68 per share. (Input all amounts as positive values.) c-2. What is your margin? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c-3. What is your effective annual return if you cover your short position at this price in four months? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started