Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You decide to sell short 100 shares of Gogu stock when it is selling at its yearly high of RM56. Your broker tells you that

You decide to sell short 100 shares of Gogu stock when it is selling at its yearly high of RM56. Your broker tells you that your margin requirement is 45% and that the commission on the purchase is RM155.While you are short the stock, Gogu pays a RM2.50 per share dividend. At the end of one year, you buy 100 shares of Gogu at RM45 to close out your position and are charged a commission of RM145 and 8% interest on the money borrowed. What is your rate of return on the investment?

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

The Money Book Of Personal Finance

Authors: Richard Eisenberg

1st Edition

0446524298, 9780446524292

More Books

Students also viewed these Finance questions