You decide to sell short 200 shares of Charlotte Horse Farms when it is selling at its yearly high of $48. Your broker tells you that your margin requirement is 50 percent and that the commission on the purchase is $360. While you are short the stock, Charlotte pays a $2.90 per share dividend. At the end of one year, you buy 200 shares of Charlotte at $34 to close out your position and are charged a commission of $350 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 200 shares of Charlotte Horse Farms when it is selling at its yearly high of $48. Your broker tells you that your margin requirement is 50 percent and that the commission on the purchase is $360. While you are short the stock, Charlotte pays a $2.90 per share dividend. At the end of one year, you buy 200 shares of Charlotte at $34 to close out your position and are charged a commission of $350 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. %
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:You decide to sell short 200 shares of Charlotte Horse Farms when it is selling at its yearly high of $48. Your broker tells you that your margin requirement
is 50 percent and that the commission on the purchase is $360. While you are short the stock, Charlotte pays a $2.90 per share dividend. At the end of
one year, you buy 200 shares of Charlotte at $34 to close out your position and are charged a commission of $350 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.
%
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