You decide to short-sell 200 shares of Staples (SPLS), which currently trades at $10 per share....
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You decide to short-sell 200 shares of Staples (SPLS), which currently trades at $10 per share. You post an initial margin of $1,000. You also post a stop-buy order at $11.50 for the 200 shares to minimize potential losses in case the price of SPLS goes up. The maintenance margin requirement is 25% of the value of the short-sale. Assume that you don't earn any interest on the assets in the account. What is the worst rate of return you can possibly achieve? Does your answer change if you placed a stop-buy order at $12.50 (instead of $11.50)? You decide to short-sell 200 shares of Staples (SPLS), which currently trades at $10 per share. You post an initial margin of $1,000. You also post a stop-buy order at $11.50 for the 200 shares to minimize potential losses in case the price of SPLS goes up. The maintenance margin requirement is 25% of the value of the short-sale. Assume that you don't earn any interest on the assets in the account. What is the worst rate of return you can possibly achieve? Does your answer change if you placed a stop-buy order at $12.50 (instead of $11.50)?
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Related Book For
Fundamentals Of Investing
ISBN: 9780135175217
14th Edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
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