Transcribed Image Text
An investor sells short 500 shares of ABC Corporation on June 1,at a time when the price per share is $120. The position is closedout 3 months later, August 31, when the price per share is $100. Adividend of $4 per share was paid July 31, one month before theshort position is closed out.Suppose that the investor must open a margin account at the timethe short position is taken. The margin required is 50% of thevalue of the stock sold short. The investor also earn 1% per month,compounded monthly, on the margin account. Find the investor's3-month rate of return on the investment.answer: 29.63%
Other questions asked by students
Basic Math
Statistics
Accounting
Accounting