You decide to sell 100 shares of davis industries short on, Ask an Expert

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You decide to sell 100 shares of Davis Industries short on margin when it is selling at its yearly high of S32. Your broker tells you that your margin requirement is 55 percent and that the commission on the sale is $25. While you are short, Davis pays a S0.50 per share dividend. At the end of one year you buy your Davis shares (cover your short sale) at $28 and are charged a commission of S10 and a 7 percent interest rate.

a. What is your profit on the investment?

b. What is your rate of return on the investment? (include your initial commission in your initial investment).

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92666975

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