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Problem $4$: Simple Calculations

A$.$ A stock dealer maintained a bid price of $$1000\mathrm{.}50$ for a stock and an ask price of $$1003\mathrm{.}25.$ If the

dealer executed trades for $500$ shares $($buying $500$ shares and selling $500$ shares, what was the

dealer's gross trading profit for this security?

B$.$ You short $150$ shares of Macy's at $$33$ per share. A week later, you buy the shares back at $$37$ per

share. Total transaction costs $($for both shorting and buying back to cover your short$)$ were $$9.$

What is your profit $($or loss$)$ on the trade?

C$.$ You short $100$ shares of J Crew at $$33$ per share. A week later, you buy the shares back at $$5$ per

share. Total transaction costs $($for both shorting and buying back to cover your short$)$ were $$9.$

What is your profit $($or loss$)$ on the trade?

D$.$ Assume you purchased $500$ shares of $xYZ$ on margin at $$40$ per share from your broker. If your

initial margin is $60\%,$ what is the amount you borrowed from the broker?

E$.$ You are bullish on Telecom. The current market price is $$50$ per share, and you have $$5,000$ of

your own to invest. You borrow an additional $$5,000$ from your broker at an interest rate of

$8\frac{\%}{?}$ year and invest the entire $$10,000$ in Telecom. What will your rate of return be if the price of

Telecom goes up by $10\%$ during the next year?

F$.$ An investor purchased a share at a market price of $$50$ when the initial margin requirement was

$70\%.$ Over the next hour, the price goes up to $$60.$ Ignoring interest, what is the investor's

percentage return?

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