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The current market price for ABC is $115 per share. Initial margin is 50%, maintenance margin...

The current market price for ABC is $115 per share. Initial margin is 50%, maintenance margin is 35% and there is no margin interest. ABC pays annual cash dividends of $4.50 per share. You believe the stock price will decrease over the next year and wish to sell short using margin. Suppose you are correct and the stock falls to $88 per share at the end of the year. What is your percentage return on assets for this trade? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

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solution: Initial margin =115*0.5 Add : Gain due to fall in price =(115-88) Less : Dividend payable to lender of shares Remai

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