You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high of $53. Your broker tells you that your margin requirement is 55 percent and that the commission on the purchase is $175. While you are short the stock, Charlotte pays a $2.40 per share dividend. At the end of one year, you buy 100 shares of Charlotte at $42 to close out your position and are charged a commission of $165 and 13 percent interest on the money borrowed. What is your rate of return on the investment? Do not round intermediate calculations. Round your answer to two decimal places

You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high of $53. Your broker tells you that your margin requirement is 55 percent and that the commission on the purchase is $175. While you are short the stock, Charlotte pays a $2.40 per share dividend. At the end of one year, you buy 100 shares of Charlotte at $42 to close out your position and are charged a commission of $165 and 13 percent interest on the money borrowed. What is your rate of return on the investment? Do not round intermediate calculations. Round your answer to two decimal places

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter11: Property Dispositions

Section: Chapter Questions

Problem 52P

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Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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