3. If you sell 100 shares short at $40 on 60% margin and buy them back...

Question

Question

Answer 1

Answer #1

number of share = 100

selling price = 40- 2% commission= 39.2

Buy at 36 + 2% = 36.72

profit before commission = (39.2-36.72)*100= 248

rate of return 248/3600 *100 = 6.88

Answer 2

Similar Homework Help Questions

You want to short sell 100 shares of PQR using a 60% margin. The maintenance margin...

You want to short sell 100 shares of PQR using a 60% margin. The maintenance margin is 30%. The current price of PQR is $40. How much money did you have to invest today? What price will trigger a margin call? What is the overall rate of return on your investment if the stock is selling at a price of $48 in 1 year? What is the overall rate of return on your investment if the stock is selling at...
Suppose you buy a round lot of Francesca Industries stock (100 shares) on 60 percent margin...

Suppose you buy a round lot of Francesca Industries stock (100 shares) on 60 percent margin when the stock is selling at $30 a share. The broker charges a 8 percent annual interest rate, and commissions are 4 percent of the stock value on the purchase and sale. A year later you receive a $0.70 per share dividend and sell the stock for $40 a share. What is your rate of return on Francesca Industries? Do not round intermediate calculations....
You sell short 700 shares of Microsoft that are currently selling at $60 per share. You...

You sell short 700 shares of Microsoft that are currently selling at $60 per share. You post the 50% margin required on the short sale. If you earn no interest on the funds in your margin account, what will be your rate of return after 1 year if Microsoft is selling at $54? (Ignore any dividends.)

Assume you sell short 100 shares of common stock at $18 per share, with initial margin...

Assume you sell short 100 shares of common stock at $18 per share, with initial margin at 54%. What would be your rate of return if you repurchase the stock at $35 per share? The stock paid no dividends during the period, and you did not remove any money from the account before making the offsetting transaction. Answer in percentages, for example if the answer is 43.51%, answer 43.51, and remember to use a dot as a decimal separator Clarification:...
Suppose you buy a round lot of Francesca Industries stock (100 shares) on 65 percent margin...

Suppose you buy a round lot of Francesca Industries stock (100 shares) on 65 percent margin when the stock is selling at $15 a share. The broker charges a 8 percent annual interest rate, and commissions are 4 percent of the stock value on the purchase and sale. A year later you receive a $0.75 per share dividend and sell the stock for $21 a share. What is your rate of return on Francesca Industries? Do not round intermediate calculations....
You sold short 100 shares of Macy's, Inc. common stock on margin at $29.78 per share....

You sold short 100 shares of Macy's, Inc. common stock on margin at $29.78 per share. Assume the initial margin is 50% and the maintenance margin is 30%. One year later, the stock price closes at $17.00, and it has paid cash dividends of $1.51 per share. What is your return on equity? Ignore margin interest.

You sold short 100 shares of Kraft Heinz Co. common stock on margin at $83.55 per...

You sold short 100 shares of Kraft Heinz Co. common stock on margin at $83.55 per share. Assume the initial margin is 50% and the maintenance margin is 30%. One year later, the stock price closes at $59.61, and it has paid cash dividends of $2.50 per share. What is your return on equity? Ignore margin interest.
2) You sell short 100 shares of ABC stock at $40 per share. The initial margin...

2) You sell short 100 shares of ABC stock at $40 per share. The initial margin is 50% and the maintenance margin is 40% How much do you post at the margin account as your initial margin per share? (20points) II) At what price will you get a margin call? (30points)
1. If you buy 100 shares of a stock at $50 on 40% margin and it...

1. If you buy 100 shares of a stock at $50 on 40% margin and it subsequently declines to > call? Assume the maintenance margin is 25%. (5) 30 on 40% margin and it subsequently declines to $36, what would be your margin

TGT is currently trading at $40 per share. You decide to buy 1,000 shares on margin...

TGT is currently trading at $40 per share. You decide to buy 1,000 shares on margin with a margin percentage of 70%. Your margin loan carries an interest rate of 10% p.a. One year from today, you sell TGT at $50 per share. Your Net Profit is $__________ and you had a return of________%.