Question
You believe the stock in Freeze Frame Co. is going to fall, so you short 600 shares at a price of $59. The initial margin
You believe the stock in Freeze Frame Co. is going to fall, so you short 600 shares at a price of $59. The initial margin is 30 percent. 1. Construct the equity balance sheet for the original trade. (Input all amounts as positive values. Omit the "$" sign in your response.) Assets Liabilities and account equity Proceeds from sale $ Short position $ Initial margin deposit Account equity Total $ Total $ 2-a. Construct an equity balance sheet for a stock price of $55 per share. (Input all amounts as positive values. Omit the "$" sign in your response.) Assets Liabilities and account equity Proceeds from sale $ Short position $ Initial margin deposit Account equity Total $ Total $ 2-b. What is your margin? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Margin % 2-c. What is your effective annual return if you cover your short position at this price in 6 months? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Effective annual return % 3-a. Construct an equity balance sheet for a stock price of $64 per share.(Input all amounts as positive values. Omit the "$" sign in your response.) Assets Liabilities and account equity Proceeds from sale $ Short position $ Initial margin deposit Account equity Total $ Total $ 3-b. What is your margin? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Margin % 3-c. What is your effective annual return if you cover your short position at this price in 6 months? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Effective annual return %
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