Question: Please step by step guide A stock from $45 at t = 0 to $55 at t = 1. If you are selling this stock

Please step by step guide

A stock from $45 at t = 0 to $55 at t = 1. If you are selling this stock short, and assume broker holds proceeds of sale plus requires 50% margin, what is your return on equity over this time period?

A. 0.2222

B. -0.4444

C. 0.4444

D. -0.2222

A stock moves from $45 at t = 0 to $55 at t = 1. If you buy it on margin (50%), and assume zero interest to borrow money from your broker, what is your return on equity over this time period?

A. 0.2222

B. -0.4444

C. 0.4444

D. -0.2222

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!