Question: Data below is applicable to questions 1 & 2. You have been approached by a trader that requires assistance on margin-buying and short-selling on First

Data below is applicable to questions 1 & 2. You have been approached by a trader that requires assistance on margin-buying and short-selling

Data below is applicable to questions 1 & 2. You have been approached by a trader that requires assistance on margin-buying and short-selling on First Rand Ltd.. He has provided you with the current Bid and Ask price of FirstRand Ltd. as well as a forecast of the price in 1 month time (see table below). Assume a portfolio value/short position of R10 000.00: Bid Today R89.11 1 Month R63.27 Ask R91.78 R65.16 Question 2 Calculate the return assuming that shares are short-sold assuming an initial required margin of 40% and a maintenance margin of 25%. A) 67.53% B) 74.58% C) 67.19% D) 76.6% E) 60.47% Correct answer is C

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