Question: Please help with part c. Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $70 per share. The initial margin
Please help with part c.
Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $70 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $70 to $82.50, and the stock has paid a dividend of $10.00 per share. Required: a. What is the remaining margin in the account? Remaining margin $ 12,500 b-1. What is the margin on the short position? (Round your answer to 2 decimal places.) Short margin 15.15 % b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin call? Yes O No c. What is the rate of return on the investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return %
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