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Old Economy Traders opened an account to short sell 1,300 shares of Internet Dreams at $46 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 $46 to $59, and the stock has paid a dividend of $3.50 per share.

a. What is the remaining margin in the account? (Omit the "tiny_mce_markerquot; sign in your response.)

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

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

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M941923

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