On January 2, you sold short 1,000 shares of ABC stock at $27 per share. On...

On January 2, you sold short 1,000 shares of ABC stock at $27 per share. On March 2, a dividend of $1 per share was paid. On April 2, covered the short sale by buying the stock at a price of $25.75 per share. You paid $20 in commissions for the roundtrip ($10 to short, $10 to cover). Assuming you have no other positions, what is the value of your account on April 2? Present your answer rounded to the nearest cent in this format, $123.45

Expert Solution

jeff jeffy answered 4 months ago

1. a. On January 2, you sold short 1,000 shares of ABC stock at $25 per...

1. a. On January 2, you sold short 1,000 shares of ABC stock at $25 per share. On March 2, a dividend of $1 per share was paid. On April 2, covered the short sale by buying the stock at a price of $23 per share. You paid $20 in commissions for the roundtrip ($10 to short, $10 to cover). Assuming you have no other positions, what is the value of your account on April 2? Present your answer rounded...

Eight months ago, you sold short 1,000 shares of ABC Company at $30 per share. The...

Eight months ago, you sold short 1,000 shares of ABC Company at $30 per share. The initial margin requirement is 50% and maintenance margin is 30%. Ignoring borrowing cost of the shares, a) calculate the price level that you receive margin call. b) calculate the (i) holding period percentage return and (ii) annual percentage return (APR) of your margin position if you close the margin position at $28 today, immediately after dividend of $1 per share was paid by the...

Assume you sell short 1,000 shares of common stock at $35 per share. What would be...

Assume you sell short 1,000 shares of common stock at $35 per share. What would be your profit if you repurchase the stock at $25 per share? The stock paid no dividends during the period. A. $10,000 B. -$5,600 C. $5,600 D. -$10,000. E. $12,600

Assume you sold short 100 shares of common stock at $70 per share. The initial margin...

Assume you sold short 100 shares of common stock at $70 per share. The initial margin is 30%. What would be the maintenance margin if a margin call is made at a stock price of $85? A) 40.5% B) 20.5% C) 35.5% D) 23.5% E) none of the above 53. You sold short 100 shares of common stock at $45 per share. The initial margin is 30%. At what stock price would you receive...

1. Assume you sold short 100 shares of common stock at $50 per share. The initial...

1. Assume you sold short 100 shares of common stock at $50 per share. The initial margin is 60%. What would be the maintenance margin if a margin call is made at a stock price of $60? 2. Assume you sell short 100 shares of common stock at $45 per share, with initial margin at 50%. What would be your rate of return if you repurchase the stock at $40/share? The stock paid no dividends during the period, and you...

A trader opened an account to short-sell 1,000 shares of a tech stock at $120 per share.

A trader opened an account to short-sell 1,000 shares of a tech stock at $120 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of the stock has risen from $120 to $131.20, and the stock has paid a dividend of $20.00 per share. What is the remaining margin in the account?

You short sold 400 shares of a stock at $51 a share. The initial margin is...

You short sold 400 shares of a stock at $51 a share. The initial margin is 50% and the maintenance margin is 25%. What is the amount of your liability for this transaction as initially shown on your account balance sheet? Select one: a. $7,650 b. $5,100 c. $15,300 d. $10,200 e. $20,400 The answer is d or e? what does it mean initial transaction? The first transaction that is shown on the Liability and Equity?

Recently, you sold 500 shares of stock for $16.60 a share. the sale was a short...

Recently, you sold 500 shares of stock for $16.60 a share. the sale was a short sale with an initial margin requirement of 70 percent. The maintenance margin is 35 percent. The stock is currently trading at $17.80 a share. What is your current short position in this stock?

Question 4 The stock of ABC Inc is trading at $50. You short sold 350 shares...

Question 4 The stock of ABC Inc is trading at $50. You short sold 350 shares of ABC at this price. However, price increased to $55, at which point you decided to close the trade. What was your percentage return? The initial margin rate is 75%. Question 5 Consider the short sale trade in the previous question. If your brokerage requires a maintenance margin of 40%, at what price will you get a margin call? The initial margin rate is...

Suppose that you sell short 1,000 shares of Intel, currently selling for $20 per share, and...

Suppose that you sell short 1,000 shares of Intel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account. a. If you earn no interest on the funds in your margin account, what will be your rate of return after 1 year if Intel stock is selling at: (i) $22; (ii) $20; (iii) $18? Assume that Intel pays no dividends. b. If the maintenance margin is 25%, how high can Intel’s price rise before...

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