Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Introductory Financial Accounting For Business

Authors: Thomas P. Edmonds, Christopher Edmonds

2nd Edition

1260575306, 9781260575309

More Books

Students also viewed these Accounting questions

Question

How important is it to gather primary data?

Answered: 1 week ago