Suppose that you sell short 1,000 shares of Google, currently selling for $30 per share and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Suppose that you sell short 1,000 shares of Google, currently selling for $30 per share and give your broker $20,000 to establish your margin account. a. If you do not carn any interest on the funds in your margin account, what will be your rate of return after one year if Google stock is selling at (i) $24, (ii) $36? Assume that Google pays a divident of $ 1.5 per share.Assume that the prices should be interpreted as after the dividend has been paid. (20 points) b. If the maintenance margin is 35% how high can Google's share prices rise before you get a margin call? (10 points) Suppose that you sell short 1,000 shares of Google, currently selling for $30 per share and give your broker $20,000 to establish your margin account. a. If you do not carn any interest on the funds in your margin account, what will be your rate of return after one year if Google stock is selling at (i) $24, (ii) $36? Assume that Google pays a divident of $ 1.5 per share.Assume that the prices should be interpreted as after the dividend has been paid. (20 points) b. If the maintenance margin is 35% how high can Google's share prices rise before you get a margin call? (10 points)
Expert Answer:
Answer rating: 100% (QA)
Short Selling Google Stock Return Calculations and Margin Call Assumptions Short selling 1000 shares ... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Riegel Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2020, consists of products D, E, F, G, H, and I. Relevant per unit...
-
Oscar's Bowling, Inc., wants to break into Pindown metropolitan market with one of its super-sized 200-lane, 24-hour bowling alleys. It has, however, only enough capital to build one facility. Oscar...
-
A plank with a mass M = 6.00 kg rides on top of two identical solid cylindrical rollers that have R = 5.00 cm and m = 2.00 kg (Fig. P10.86). The plank is pulled by a constant horizontal force F of...
-
Fill in the blank: Roughly, when arranged in increasing order, the uppermost 25% of a data set are greater than or equal to ________.
-
Solve these simultaneous equations. y = 1/2(1 x 2 ) y = x 1
-
On October 1, 2017, Gordon borrows \($150\),000 cash from a bank by signing a three-year installment note bearing 10% interest. The note requires equal payments of \($60\),316 each year on September...
-
Near the end of 2013, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2013. To prepare a master budget for January,...
-
The Williamson Corporation wants to help its employees save for retirement by allowing them to defer part of their compensation on a pretax basis that the company would match. The best option for...
-
Target Corporation reported the following on its income statement. For 12 Months Ended ($ millions) Feb. 2, 2019 Feb. 3, 2018 Jan. 28, 2017 Total revenue $75,356 $72,714 $70,271 Cost of sales 53,299...
-
James Johns is the owner of a technology company that specializes in manufacturing computers and portable printers as well as in providing tech supports to individuals and businesses. Earlier today,...
-
10. On October 7, 2010, ENRNewYork of McGraw-Hill reported: "New Jersey Governor Chris Christie today killed the $8.7 billion Trans-Hudson River passenger rail tunnel project that was expected to...
-
The costs of equity are 17% for Lindner and 15% for Allen. Lindner plans to offer $5.00 cash and 1.5 shares of its own stock for each share of Allen a. Assume no synergy. What are the gains (losses)...
-
The Detroit Company which makes wooden chicken coops, is creating their Direct Materials Budget for the upcoming year. Detroit estimated the following: Units of Production Needed for next year is...
-
PPO stock has a beta of 0.97 and an expected return of 11.22 percent. The risk-free rate of return is 2.48 percent. What is the expected return on the market?
-
With the sieve of Eratosthenes being used to find and count prime numbers. Describe how sieve methods are used in number theory. What kind of results have been established using such methods?
-
Based on the reaction (a) Outline the reaction mechanism. (b) Sketch the energy diagram. (c) Give the rate equation. H2O CI (d) Explain what happens to the reaction rate if The leaving group is...
-
Use the following data to answer the next two (2) questions: Product 1 Product 2 Product 3 Direct Material Cost $25,000 $30,000 $35,000 Direct Labor Cost $30,000 $40,000 $50,000 Direct Labor Hours...
-
You are the manager for the bond portfolio of a pension fund. The policies of the fund allow for the use of active strategies in managing the bond portfolio. It appears that the economic cycle is...
-
What is the Sharpe ratio of the best feasible CAL? A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund,...
-
In addition to the discounted dividend model approach, Mulroney decided to look at the price- earnings ratio and price-book ratio, relative to the S&P 500, for both Eastover and Southampton. Mulroney...
-
The following are summaries of the cash book and bank accounts of J. Duncan who does not keep his books using the double entry system. You are required to: (a) Calculate the value of J. Duncan's...
-
Read the following and answer the questions below. On 31 December 2015 the bank column of C. Tench's cash book showed a debit balance of 1,500. The monthly bank statement written up to 31 December...
-
The bank columns in the cash book for June 2016 and the bank statement for that month for D. Hogan are as follows: You are required to: () Write the cash book up to date to take the above into...
Study smarter with the SolutionInn App