You short sell 200 shares of stock at $48.23 per share and cover your short positio three months later at $44.66 per share. If your broker's initial margin requirement 55%, and the maintenance margin requirement is 45%, what is your rate of return?
You short sell 200 shares of stock at $48.23 per share and cover your short positio three months later at $44.66 per share. If your broker's initial margin requirement 55%, and the maintenance margin requirement is 45%, what is your rate of return?
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 short sell 200 shares of stock at $48.23 per share and cover your short position
three months later at $44.66 per share. If your broker's initial margin requirement is
65%, and the maintenance margin requirement is 45%, what is your rate of return?
100tne
Expert Solution
Step 1: Define=rate of return
Rate of return is the amount of profit or loss on the investment made as a percentage of initial investment.
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