What is the rate of return on the investment

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Reference no: EM132072815

Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $30 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $30 to $38.50, and the stock has paid a dividend of $2.40 per share.

a. What is the remaining margin in the account?

Remaining margin $

b-1. What is the margin on the short position? (Round your answer to 2 decimal places.)

Short margin %

b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin call?

Yes

c. What is the rate of return on the investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

Rate of return %

Reference no: EM132072815

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