Question
You decide to sell short 300 shares of Charlotte Horse Farms when it is selling at its yearly high of $57. Your broker tells you
You decide to sell short 300 shares of Charlotte Horse Farms when it is selling at its yearly high of $57. Your broker tells you that your margin requirement is 45 percent and that the commission on the purchase is $495. While you are short the stock, Charlotte pays a $2.30 per share dividend. At the end of one year, you buy 300 shares of Charlotte at $47 to close out your position and are charged a commission of $480 and 8 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. %
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