You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high of $51. Your broker tells you that your margin requirement is 50 percent and that the commission on the purchase is $170. While you are short the stock, Charlotte pays a $2.35 per share dividend. At the end of one year, you buy 100 shares of Charlotte at $37 to close out your position and are charged a commission of $160 and 7 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 $51. Your broker tells you that your margin requirement is 50 percent and that the commission on the purchase is $170. While you are short the stock, Charlotte pays a $2.35 per share dividend. At the end of one year, you buy 100 shares of Charlotte at $37 to close out your position and are charged a commission of $160 and 7 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. %
Chapter11: Property Dispositions
Section: Chapter Questions
Problem 93DC
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Transcribed Image Text:You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high of $51. Your broker tells you that your margin requirement is 50 percent and that the commission on the purchase is $170. While you are short the stock, Charlotte pays a $2.35 per share
dividend. At the end of one year, you buy 100 shares of Charlotte at $37 to close out your position and are charged a commission of $160 and 7 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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