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You decide to sell short 100 shares of Techy Bros Inc. when it is selling at its yearly high of $50. Your broker tells you
You decide to sell short 100 shares of Techy Bros Inc. when it is selling at its yearly high of $50. Your broker tells you that your margin requirement is 60 percent and that the commission on the purchase is 2%. While you are short the stock, Techy Bros Inc. pays a $1.50 per share dividend. At the end of one year, you buy 100 shares of Techy Bros Inc. at $35 to close out your position and are charged a commission at 1% and 9 percent interest on the money borrowed. What is your rate of return on the investment?
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