Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $40 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $40 to $50, and the stock has paid a dividend of $2 per share. Required: a. What is the remaining margin in the account in dollars? b-1. What is the margin percentage on the short position? b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin call? multiple choice Yes No
Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $40 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $40 to $50, and the stock has paid a dividend of $2 per share. Required: a. What is the remaining margin in the account in dollars? b-1. What is the margin percentage on the short position? b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin call? multiple choice Yes No
Chapter7: Stocks (equity) - Characterstics And Valuation
Section: Chapter Questions
Problem 15PROB
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Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $40 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $40 to $50, and the stock has paid a dividend of $2 per share.
Required:
a. What is the remaining margin in the account in dollars?
b-1. What is the margin percentage on the short position?
b-2. If the maintenance margin requirement is 30%, will Old Economy receive a margin call?
multiple choice
-
Yes
-
No
c. What is the
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