Question
You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high of $61. Your broker tells you
You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high of $61. Your broker tells you that your margin requirement is 50 percent and that the commission on the purchase is $190. While you are short the stock, Charlotte pays a $2.30 per share dividend. At the end of one year, you buy 100 shares of Charlotte at $48 to close out your position and are charged a commission of $170 and 7 percent interest on the money borrowed. What is your rate of return on the investment? Do not round intermediate calculations. Round your answer to two 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