Question: Use the data set (At the bottom) for the monthly closing price of Visa, the credit card company, from April 2008 to April 2022

Use the data set (At the bottom) for the monthly closing price of Visa, the credit card company, from April 2008 to April 2022  

You decide to short 200 shares of Visa's stock on July 30, 2021, based on the following terms.
1): The stock borrower (you) must leave cash collateral with the lender of 102% of the market  value of the borrowed shares.
2): Under Reg T, you have to post an additional 50% in the margin account.
3): You own a stock portfolio worth $12,500 on top of this.

1. What is the total amount of extra collateral that you have to deposit with the broker? How much of it should be in cash? 


2.  Refer to the closing prices of Visa on the different dates provided. Calculate returns every month from May 2021 to April 2022. The price number is already adjusted to include dividend. To calculate returns from month t to month t + 1, you need to calculate [P (t + 1) - P (t)] / P (t); i.e., P (t+1) / P (t) - 1. For instance, from April 30, 2021, to May 28, 2021 (last trading day of May), returns = 225.46 / 231.67 - 1 = -0.0268 (or -2.68%). 


3.Following instruction in Question 2, calculate the returns for every month from May 2008 to  April 2022. What is the average return during this period? What are the average returns in the first half (from 2008 to 2015) vs. in the second half (from 2016 to 2022)? (Note: Since the price is given at the end of each month, use end of Dec 2014 to end of Dec 2015 for year 2015 returns.). The average should be an arithmetic average. 


4. Refer to the closing prices of Visa on the different dates provided. Calculate returns if you have $1,000 in cash, borrow $500 at a market interest rate of 1%, and invest $1,500 in Visa from April 30, 2021, to April 29, 2022.

 

   
VISA Data Set
   
YearMonthAdj Close
2008418.910961
2008519.570406
2008618.42601
2008716.556442
2008817.200026
2008913.931946
20081012.56122
20081111.928051
20081211.926368
2009111.221473
2009212.895031
2009312.667334
2009414.799817
2009515.426353
2009614.207552
2009714.937786
2009816.224812
2009915.794877
20091017.314716
20091118.512295
20091220.019667
2010118.776743
2010219.520678
2010320.868176
2010420.68478
2010516.611092
2010616.243206
2010716.840141
2010815.83685
2010917.077417
20101017.974295
20101116.983133
20101216.217583
2011116.095459
2011216.832838
2011316.998369
2011418.037384
2011518.716217
2011619.491344
2011719.787441
2011820.32873
2011919.863791
20111021.611025
20111122.470745
20111223.581675
2012123.374954
2012227.02846
2012327.459478
2012428.618361
2012526.80789
2012628.823992
2012730.092316
2012829.901133
2012931.360123
20121032.406399
20121134.963692
20121235.482613
2013136.964386
2013237.135246
2013339.840858
2013439.517143
2013541.787865
2013642.947861
2013741.598927
2013840.990242
2013944.993034
20131046.304451
20131147.903103
20131252.53429
2014150.823875
2014253.303398
2014351.017117
2014447.885555
2014550.773678
2014649.894051
2014749.965092
2014850.322643
2014950.620197
20141057.277187
20141161.25338
20141262.324478
2015160.591679
2015264.489922
2015362.304424
2015462.914032
2015565.419182
2015664.073738
2015771.88855
2015868.033638
2015966.577675
20151074.14724
20151175.513969
20151274.251755
2016171.321892
2016269.311218
2016373.371727
2016474.10083
2016575.73175
2016671.281624
2016775.010521
2016877.749535
2016979.617371
20161079.434448
20161174.437935
20161275.269897
2017179.794571
2017284.840225
2017385.900635
2017488.172119
2017592.048141
2017690.807411
2017796.404198
20178100.238678
20179102.068268
201710106.665428
201711109.196747
201712110.779602
20181120.699455
20182119.446121
20183116.422791
20184123.488739
20185127.22612
20186129.11705
20187133.299118
20188143.193649
20189146.53302
201810134.58313
201811138.351639
201812129.044464
20191132.047089
20192144.869385
20193153.028885
20194161.102112
20195158.06488
20196170.299088
20197174.665741
20198177.432907
20199169.031464
201910175.762863
201911181.315033
201912184.955612
20201195.852142
20202178.911835
20203158.824936
20204176.17424
20205192.458908
20206190.737228
20207188.002106
20208209.320206
20209197.750107
202010179.692825
202011208.014877
202012216.627747
20211191.392654
20212210.348679
20213210.020569
20214231.674316
20215225.464874
20216232.269135
20217244.755753
20218227.580429
20219221.574188
202110210.652161
202111192.747177
202112215.945557
20221225.372192
20222215.357635
20223221.347244
20224212.723724

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