Determining short sale

Assignment Help Accounting Basics
Reference no: EM1344557

Assume you're bearish on Stock Y and decide to sell short 100 shares at the current market price of $30 per share. You earn no interest on the funds in your margin account and the cost of borrowing shares is 0.25%.

a) How much cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50%?

b) How high can the price of the stock go before you get a margin call if the maintenance margin is 30%?

c) Suppose that Firm Y pays a year-end dividend $1 per share. What will be your rate of return after 1 year if you close out your short position and the stock is selling at $25 ($35) per share?

Can you help me get started with this assignment?

Reference no: EM1344557

Questions Cloud

Goals of financial management : Explain the goals of financial management. The description must include how earnings are valued, how shareholder wealth can be maximized, and how management decisions affect stockholder wealth.
Evaluate the force with the force that the earths gravity : A wrecking ball (weight = 4600 N) is supported by a boom, which might be assumed to be uniform and has a weight of 3600N. As the drawing shows, a support cable runs from the top of the boom to the tractor. The angle between the support cable and t..
Benefits of a company investing and trading securities : Suggest the potential benefits of the domestic securities markets to those investing in the foreign securities markets. Provide a specific example to support your response.
Find what is the maximum capital budget : what is the maximum capital budget that can be adopted without adversely affecting stockholder wealth?
Determining short sale : Assume you're bearish on Stock Y and decide to sell short 100 shares at the current market price of $30 per share. You earn no interest on the funds in your margin account and the cost of borrowing shares is 0.25%.
Find out the magnitude of the gravitational force : First work out the momentum before and after hitting the table. Don't forget the gravitational force.
Evaluation process to seven-step acquisition model : Discuss in scholarly detail the acquisition evaluation process to the Seven-Step Acquisition Model.
Making income statement and balance sheet : Fast Track Sports firm was started by John Ross early in 2012. Initial capital was acquired by issuing shares of common stock to various shareholders and by obtaining a bank loan.
Write down the net force equations for both blocks : An explosive charge imparts a velocity of 10,350 feet per second to a mortar as it exits the muzzle of mortar. If the mortar is elevated at 80 degrees what are the horizontal and vertical velocities on the mortar shell.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Asset turnover profit margin-target rate of return

Innovative Furnishing Solutions (IFS) a division of Steelman Corporation: Asset turnover Profit margin, Target rate of return on investments for RI, Cost of capital and other operational data, to compute the segment margin and the average assets f..

  Adjusting entry to recognize bad debts

Assuming that the company uses the percentage of receivables allowance method, prepare the adjusting entry on December 31, 2001, to recognize bad debts expense.

  Classifying items in fixed and variable costs

Which of the following is an example of a variable cost?

  Marginal tax rate and effective tax rate

Calculate the marginal tax rate and the effective tax rate for each of the C corporations. Explain why the marginal tax rate for a C corporation can exceed 35%, but the effective tax rate cannot.

  Compute depreciation and cash flow

Ohare Company's only asset as of January 1, 2007, was limousine. During 2007, only three transactions occurred:

  Corporate social responsibility

What role(s) does corporate social responsibility play in the development of a safety-first culture? What documents and strategies can management adopt to ensure that a corporate safety-first culture exists?

  Replacing the asset by using nvp methodology

The new machine will cut operating costs by $10,000 each year for the next five years. Taylor's cost of capital is 8 percent. Should the firm replace the asset? (Use NPV methodology to solve this problem)

  Compute the effect of transfer on net income

Top management has decided the transfers between the two divisions should be at $19. Compute the effect of the transfer on the net income for the Battery Division, Automotive Division, and the total company

  Schedule to determine the amount of loss

Based on the previous information, prepare a schedule to determine the amount of loss that Wells Corporation should recognize for the current year.

  What is the total amount of period costs

What is the total product costs incurred to make 10,000 units? What is the total amount of period costs incurred to sell 10,000 units?

  Find appropriate depreciation expense for the year

Fulfil all required journal entries for each of the long-term activities, which took place during 20x7. Keep in mind to account for the appropriate depreciation expense for the year on any of the long-term assets.

  Statement of cash flows using indirect method

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd