You believe the stock in Freeze Frame Co. is going to fall, so you short 950 shares
Question:
You believe the stock in Freeze Frame Co. is going to fall, so you short 950 shares at a price of $74. The initial margin is 50 percent. |
1. | Construct the equity balance sheet for the original trade. (Input all amounts as positive values. Omit the "$" sign in your response.) |
2-a. | Construct an equity balance sheet for a stock price of $65 per share. (Input all amounts as positive values. Omit the "$" sign in your response.) |
What is your margin? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
What is your effective annual return if you cover your short position at this price in 6 months? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
Construct an equity balance sheet for a stock price of $79 per share.(Input all amounts as positive values. Omit the "$" sign in your response.) |
What is your margin? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
What is your effective annual return if you cover your short position at this price in 6 months? (Negative amounts should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
Fundamentals of Investments, Valuation and Management
ISBN: 978-1259720697
8th edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin