James sells short one share for 1000. He is asked for a margin requirement of 60% and the margin account earns a rate of 10% per annum. One year later he buys back the stock for 790 . Jack sells a stock short for 600. He is required to have a margin call of 50% and the margin account generates a the margin account of 10%. One year later he buys back his share for 450. It is known that both shares pay the same dividend and both generate the same rate of yield. Determine the amount of the dividend.
James sells short one share for 1000. He is asked for a margin requirement of 60% and the margin account earns a rate of 10% per annum. One year later he buys back the stock for 790 . Jack sells a stock short for 600. He is required to have a margin call of 50% and the margin account generates a the margin account of 10%. One year later he buys back his share for 450. It is known that both shares pay the same dividend and both generate the same rate of yield. Determine the amount of the dividend.
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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James sells short one share for 1000. He is asked for a margin requirement of 60% and the margin account earns a rate of 10% per annum. One year later he buys back the stock for 790 .
Jack sells a stock short for 600. He is required to have a margin call of 50% and the margin account generates a the margin account of 10%. One year later he buys back his share for 450.
It is known that both shares pay the same dividend and both generate the same rate of yield.
Determine the amount of the dividend.
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