Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Problem 3-04
You decide to sell short 300 shares of Charlotte
Horse Farms when it is selling at its yearly high of
$49. Your broker tells you that your margin
requirement is 65 percent and that the commission
on the purchase is $525. While you are short the
stock, Charlotte pays a $2.35 per share dividend. At
the end of one year, you buy 300 shares of
Charlotte at $34 to close out your position and are
charged a commission of $520 and 9 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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Transcribed Image Text:Problem 3-04 You decide to sell short 300 shares of Charlotte Horse Farms when it is selling at its yearly high of $49. Your broker tells you that your margin requirement is 65 percent and that the commission on the purchase is $525. While you are short the stock, Charlotte pays a $2.35 per share dividend. At the end of one year, you buy 300 shares of Charlotte at $34 to close out your position and are charged a commission of $520 and 9 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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