On March 1st, Frank opens a brokerage account and sell shorts 300 shares of Doggie Treats Inc. at $50 per share. The initial margin requirement is 50%. a. What is the margin in Frank's account when he first sells the stock? b. The stock pays a cash dividend of $1 on March 28th, and the share price falls to $40 per share by the end of March, what is the remaining equity in his account? c. What is the monthly rate of return on his margined position?
On March 1st, Frank opens a brokerage account and sell shorts 300 shares of Doggie Treats Inc. at $50 per share. The initial margin requirement is 50%. a. What is the margin in Frank's account when he first sells the stock? b. The stock pays a cash dividend of $1 on March 28th, and the share price falls to $40 per share by the end of March, what is the remaining equity in his account? c. What is the monthly rate of return on his margined position?
Chapter5: The Cost Of Money (interest Rates)
Section: Chapter Questions
Problem 2PROB
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Transcribed Image Text:On March 1st, Frank opens a brokerage account and sell
shorts 300 shares of Doggie Treats Inc. at $50 per share.
The initial margin requirement is 50%.
a. What is the margin in Frank's account when he first sells
the stock?
b. The stock pays a cash dividend of $1 on March 28th, and
the share price falls to $40 per share by the end of March,
what is the remaining equity in his account?
C.
What is the monthly rate of retur on his margined
position?
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