FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You sell short 100 shares of IBM stocks at $100 per share and deposit $5,000 in your account. One year later (today), the IBM stock

  1. You sell short 100 shares of IBM stocks at $100 per share and deposit $5,000 in your account. One year later (today), the IBM stock price falls to $60 per share in one day. Assume 30% maintenance margin, and interest rate of 9% per year. Please show all work written out. No excel.

  1. (5 pts) What is the current margin of your account?
  1. 157.5%
  2. 83.3%
  3. 90.8%
  4. -43.6%

  1. (5 pts) What is the return of your 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

Create Wealth How You Can Ditch The 9 5 Job With Multifamily Investing

Create Wealth How You Can Ditch The 9 5 Job With Multifamily Investing

Authors: Pam Scamardo

1st Edition

979-8986637709

More Books

Students also viewed these Finance questions

Question

★★★★★
On December 31, 2015, Bryant Company exchanges 10,000 of its $10 par value shares for a 90% interest in Jones Company. The purchase is recorded at the $72 per-share fair value of Bryant shares. Jones...

Answered: 1 week ago

Question

★★★★★
Describe the priority for cleaning guestrooms.

Answered: 1 week ago

Question

★★★★★
Little Theatre is a nonprofit organization devoted to staging plays for children. The theater has a very small full-time professional administrative staff. Through a special arrangement with the...

Answered: 1 week ago

Question

★★★★★
You sell short 100 shares of IBM stocks at $100 per share and deposit $5,000 in your account. One year later (today), the IBM stock price falls to $60 per share in one day. Assume 30% maintenance...

Answered: 1 week ago

Question

★★★★★
(M21) A new technology (X) can be used to produce an output with market value equal to 80. The owner wants to sell the rights of use of the technology at auction to reach a higher profit. You have...

Answered: 1 week ago

Question

★★★★★
Problem 1 ( 6 0 Pts ) : Conceptual Data Model in UML Express the data model in a UML Class Diagram using LucidChartLinks to an external site.. Label the relationships where useful. Use directionality...

Answered: 1 week ago

Question

★★★★★
On January 1, 2023. Parent Company Inc. acquired 100\% of Subsidiary Corp.'s outstanding common stock by exchanging 37.500 shares of Parent's $2 par value common voting stock. On January 1, 2023,...

Answered: 1 week ago

Question

★★★★★
Some recent financial statements for Smolira Golf, Incorporated, follow. SMOLIRA GOLF, INCORPORATED Balance Sheets as of December 31, 2021 and 2022 Assets 2021 2022 Liabilities and Owners Equity 2021...

Answered: 1 week ago

Question

★★★★★
Give answer of the Following questions with detail explanation What did Bob Iger do to rejuvenate Disney? Consider the impact that he has had in terms of the company's business strategy , innovation...

Answered: 1 week ago

Question

★★★★★
! Required information [The following information applies to the questions displayed below.] Stark company has the following adjusted accounts and normal balances at its December 31 year-end. Notes...

Answered: 1 week ago

Previous Question Next Question