ou decide to sell short 300 shares of Charlotte Horse Farms when it is selling at its yearly high of $56. Your broker tells you that your margin requirement is 50 percent and that the commission on the purchase is $480. While you are short the stock, Charlotte pays a $2.25 per share dividend. At the end of one year, you buy 300 shares of Charlotte at $42 to close out your position and are charged a commission of $460 and 8 percent interest on the money borrowed. What is your rate of return on the investment? Do not round intermediate calculations. Round your answer to two decimal places

ou decide to sell short 300 shares of Charlotte Horse Farms when it is selling at its yearly high of $56. Your broker tells you that your margin requirement is 50 percent and that the commission on the purchase is $480. While you are short the stock, Charlotte pays a $2.25 per share dividend. At the end of one year, you buy 300 shares of Charlotte at $42 to close out your position and are charged a commission of $460 and 8 percent interest on the money borrowed. What is your rate of return on the investment? Do not round intermediate calculations. Round your answer to two decimal places

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter11: Property Dispositions

Section: Chapter Questions

Problem 52P

See similar textbooks

Similar questions

You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high of R56. Your broker tells you that your margin requirement is 45 percent and that the commission on the purchase is R155. While you are short the stock, Charlotte pays a R2.50 per share dividend. At the end of one year, you buy 100 shares of Charlotte at R45 to close out your position and are charged a commission of R145 and 8 percent interest on the money borrowed. What is your rate of return on the investment?
You decide to sell short 100 shares of Charlotte Horse Farms when it is sell at its yearly high of R56. Your broker tells you that your margin requirement is 45 percent and that the commission on the purchase is R155. While you are short the stock, Charlotte pays a R2.50 per share dividend. At the end of one year, you buy 100 shares of Charlotte at R45 to close out your position and are charged a commission of R145 and 8 percent interest on the money borrowed. What is your rate of return on the investment?
You decide to sell short 100 shares of Github Industries when it is selling at its yearly high $56. Your broker tells you that your margin requirement is 45 % and that the commision on the purchase is $155. While you are short the stock, Github pays a $2.50 per share dividend. At the end of one year, you buy 100 shares of Github at $45 to close out your position and are charged a commision of $145 and 8 % interest on the money borrowed. What is your rate of return on the investment?
Al Rodriguez sells 500 shares of Gold Mine Corp. short at $80 per share. The margin requirement is 50 percent. The stock falls to $62 over a three-month time period, and he closes out his position. How much is his initial margin? What is his percentage gain or loss on his initial margin? If he is in a 35 percent tax bracket for short-term capital gains and a 15 percent bracket for long-term capital gains, what is his tax obligation? If the stock went up to $94 instead of down to $62, what would be his dollar loss? Assuming this is his only transaction for the year, how large a tax deduction could he take against other income?
What is Rate of Return? Adam is a retail investor and decides to purchase 10 shares of Company A at a per-unit price of $20. Adam holds onto shares of Company A for two years. In that time frame, Company A paid yearly dividends of $1 per share. After holding them for two years, Adam decides to sell all 10 shares of Company A at an ex-dividend price of $25. Adam would like to determine the rate of return during the two years he owned the shares.
On March 1st, Frank opens a brokerage account and sell shorts 200 shares of Doggie Treats Inc. at $60 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 $50 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?
A year ago, Kim Altman purchased 190 shares of BLK, Inc. for $27.00 on margin. At that time the margin requirement was 60 percent. If the interest rate on borrowed funds was 6 percent and she sold the stock for $35.50, what is the percentage return on the funds she invested in the stock? Round your answer to two decimal places. %
Kim opens a brokerage account and purchases 500 shares of Batliboy at OMR50 per share. She borrows OMR5,000 from her broker to help pay for the purchase. The interest rate on the loan is 7% What is the margin in Kim's account when she first purchases the stock If the share price falls to OMR40 per share by the end of the year, what is the remaining margin in her account? If the maintenance margin requirement is 30%, will she receive a margin call? What is the rate of return on her investment?
Arthur buys $2, 000 worth of stock. Six months later, the value of the stock has risen to $2, 200 and Arthur buys another $1, 000 worth of stock. After another eight months, Arthur’s holdings are worth $2, 700 and he sells of $800 of them. Ten months later, Arthur finds that his stock has a value of $2, 100. (a) Compute the annual time-weighted yield rate of the stock over the two-year period. (B) Compute the annual dollar-weighted yield for Arthur over this two-year time period.
After researching Best Buy common stock, Sally Wang is convinced the stock is overpriced. She contacts her account executive and arranges to sell short 400 shares of Best Buy. At the time of the sale, a share of common stock had a value of $160. Three months later, Best Buy is selling for $152 a share, and Sally instructs her broker to cover her short transaction. Total commissions to buy and sell the stock were $64. What is her profit for this short transaction?
Maggie owns 100 shares of FloorMart, Inc. The firm pays a semi-annual dividend of $0.75 per share and offers the option to reinvest the cash dividends into additional shares of company stock. If the stock is selling for $55.00 per share, how many shares of stock will Maggie receive each dividend period if she chooses the dividend reinvestment plan?
Rick Thompson is considering the following two alternatives for investing in Davis Industries whose stock is now selling for $44 per share: 1) Either buy 500 shares of stock, or, 2) Buy four-month call options on the stock with an exercise price of 45 for a $3.25 call premium. If Rick purchases shares of stock, assuming no commissions or taxes, what is his annualized percentage rate of return if the stock reaches $50 in four months? If Rick purchases call options, assuming no commissions or taxes, what is his annualized percentage rate of return if the stock reaches $50 in four months?