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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Question

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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