Question: You have $15,000 in your margin account (50% initial margin, 35% maintenance margin, interest rate on loans is 8% per year) and decide to use

You have $15,000 in your margin account (50% initial margin, 35% maintenance margin, interest rate on loans is 8% per year) and decide to use the full amount to short a stock which is currently trading at $30/share. 3 months later the stock pays a dividend of 75 cents/share and is trading at %35 per share.

A) Claculate your ROI?

B) At what price per share will a margin call be issued?

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!

I have attached my assignment. 1. Suppose you bought a two one-year gold futures contract when the Assignment 2 Details Complete and submit Assignment 2, which is worth 15% of your final grade, after...

Multiple Mutual Funds had year-end assets of $457 000 000 and liabilities of $17 000 000. There were 24 300 000 shares in the fund at year-end. What was Multiple Mutual's Net Asset Value? A...

You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of 8% per...

18. You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of 8%...

1.You are bullish about Bulls Eye stock. The current price is $25 per share and you have $5000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of 8% per...

Choose machine F and create tables for Sales Budget, Production Budget, Direct Materials Budget, Overhead Budget, SGA Budget, Income Statement, Cash Budget, and Balance Sheet For the six months ended...

21. Assume that the spot S&P500 index is 1000.00 on March 31 and that the September S&P500 futures contract on that day is 1020.00. This futures contra will mature in 180 days. The 180 day riskless...

TranscribedText: Accompanying material for the ebook Introduction to Financial Accounting in the 21% Century - Gaber & Porporato, 5" Edition McGrawHill Term Project: Part II Bookkeeping for a small...

Bookkeeping for a small business organization Case: Fantastic Coffee Roaster and Academy Ltd Background Joseph has just graduated from the Bachelor of Commerce program at York University. He has been...

Question 10 Not yet answered Marked out of 1.00 i7 Flag question A book shop business was bought with a 20% down payment of R177 175.00. The remainder of the amount was financed for 240 months at...

Parker Company borrows money from the Redwolf Bank and signs an interest-bearing promissory note. Principal Interest rate Interest $9,600 8% $128 Required: Given the details above, determine the term...

As a media buyer, how would you go about multiplying various media strengths? Provide an example.

An executive wishes to take out a $ 1.2 million mortgage. The yearly interest rate on the loan is 1.95 % and the loan is for 20 years. Calculate the monthly payments. Round your answer to the nearest...

give rationale why mann whitney test best statistical test for this case : Do significant differences exist between husbands and wives regarding holiday depression? There is an ordinal measure of...

4-17 What are the five principles of Fair Information Practices? For each principle, describe a business situation where the principle comes into play, and how you think managers should react.

4-16 Will Facebook be able to have a successful business model without invading privacy? Explain your answer. Are there any measures Facebook could take to make this possible? Over the course of less...

2. What are the components of IT infrastructure?