Old Economy Traders opened an account to short sell 1,000 shares of Internet Dreams from the previous problem. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $40 to $50, and the stock has paid : a dividend of $2 per share.a. What is the remaining margin in the account?b. If the maintenance margin requirement is 30%, will Old Economy receive a margin call?c. What is the rate of return on the investment?

Q: You want to take a long position on a stock. It costs $2,500 for 1,000 shares, so you deposit $1,250…

A: Computation:

Q: Old Economy Traders opened an account to short sell 1,000 shares of Internet Dreams at $50 per…

A: The margin on the short positionThe margin amount refers to the amount kept aside as a security…

Q: Vijay

A: Since dividends are not paid, residual income model is to be used for computationPrice of the share…

Q: Assume an initial margin requirement of 50% and a maintenance margin of 30%. An investor buys 100…

A: Data given: Initial Margin requirement = 50% Maintenance margin = 30% No. of shares bought = 100…

Q: is believed that Blue Co.’s stock price is going to decline from its current level of P88.50 anytime…

A:

Q: You purchase 800 shares of CUW at $71.51 using your full margin which as an initial margin of 70%…

A: Number of shares purchased = 800Purchase price = $71.51Initial margin = 70%Maintenance margin = 45%

Q: (Margin Purchase and Selling Short) You are very optimistic about the personal computer industry, so…

A: Margin purchase is the strategy of borrowing funds from a bank or a broker to buy stocks. Short…