a. What is the remaining margin in the account? Remaining margin b-1. What is the margin on the short position? (Round your answer to 2 decimal places.) Short margin b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin call? O Yes O No % c. What is the rate of return on the investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return %
a. What is the remaining margin in the account? Remaining margin b-1. What is the margin on the short position? (Round your answer to 2 decimal places.) Short margin b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin call? O Yes O No % c. What is the rate of return on the investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams
at $35 per share. The initial margin requirement was 50%. (The margin account pays no
interest.) A year later, the price of Internet Dreams has risen from $35 to $41.50, and the
stock has paid a dividend of $4.40 per share.
a. What is the remaining margin in the account?
Remaining margin
b-1. What is the margin on the short position? (Round your answer to 2 decimal places.)
Short margin
b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin
call?
Yes
No
c. What is the rate of return on the investment? (Negative value should be indicated by
a minus sign. Round your answer to 2 decimal places.)
Rate of return
%
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