Suppose that the bid price of Google stock is $497 per share and the ask price is $501 per share. Google does not pay any dividends. Short selling the stock is feasible at zero cost. You can borrow at an annual rate of 5 and lend at 4.5% (simple compounding). The commission of closing a forward position is $1.2 per share. The short sell cost is $4 payable when the borrowed stock is returned. What is the lowest forward price that will not allow arbitrage? Please round to two decimal places.
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Suppose that the bid price of Google stock is $497 per share and the ask price is $501 per share. Google does not pay any dividends. Short selling the stock is feasible at zero cost. You can borrow at an annual rate of 5 and lend at 4.5% (simple compounding). The commission of closing a forward position is $1.2 per share. The short sell cost is $4 payable when the borrowed stock is returned. What is the lowest forward price that will not allow arbitrage? Please round to two decimal places.
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- Suppose that you sell short 1000 shares of Xtel, currently selling for $50 per share, and give your broker $40,000 to establish your margin account. a. If you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: (i) $55; (ii) $50; (iii) $46? Assume that Xtel pays no dividends. (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) b. If the maintenance margin is 25%, how high can Xtel’s price rise before you get a margin call? (Round your answer to 2 decimal places.) c. Redo parts (a) and (b), but now assume that Xtel also has paid a year-end dividend of $2 per share. The prices in part (a) should be interpreted as ex-dividend, that is, prices after the dividend has been paid. (Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.)Suppose that you sell short 1,000 shares of Xtel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account.a. If you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: (i) $22; (ii) $20; (iii) $18? Assume that Xtel pays no dividends.b. If the maintenance margin is 25%, how high can Xtel’s price rise before you get a margin call?c. Redo parts (a) and (b), but now assume that Xtel also has paid a year-end dividend of $1 per share. The prices in part (a) should be interpreted as ex-dividend, that is, prices after the dividend has been paid..Suppose that you sell short 1,000 shares of Xtel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account. a.If you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: (i) $22; (ii) $20; (iii) $18? Assume that Xtel pays no dividends. b.If the maintenance margin is 25%, how high can Xtel’s price rise before you get a margin call? c.Redo parts (a) and (b), but now assume that Xtel also has paid a year-end dividend of $1 per share. The prices in part (a) should be interpreted as ex-dividend, that is, prices after the dividend has been paid.13.
- You have borrowed $45,000 on margin to buy shares in Tencent, which is now selling at $120 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 30%. Two days later, the stock price falls to $105 per share. a. What is the current margin and will you recieve a margin call? b. How low can the price of Baidu shares fall before you recieve a margin call?You are bearish on Telecom and decide to sell short 100 shares at the current market price of $47 per share. Required: a. How much in cash or securities must you put into your brokerage account if the broker’s initial margin requirement is 50% of the value of the short position? b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position?Suppose that you sell short 1,000 shares of Xtel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account. a. if you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: $22, $20, and $18? Assume that Xtel's pays no dividends. b. If the maintenance margin is 25%, how high can Xtel's price rise before you get a margin call? c. Redo parts a and b but now assume that Xtel has paid a year end dividend of $1 per share. The pruces in part a should be interpreted as ex-dividend, that is prices after the dividend has been paid.
- You are bearish on Telecom and decide to sell short 280 shares at the current market price of $100 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? (Round your answer to the nearest whole number.) b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position? (Round your answer to 2 decimal places.)You are bearish on Telecom and decide to sell short 100 shares at the current market price of $50 per share. Required:a. How much in cash or securities must you put into your brokerage account if the broker’s initial margin requirement is 50% of the value of the short position? b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position? (Round your answer to 2 decimal places.)You are about to purchase OSTK, which is currently trading at $20 per share. You have $5,000 of your own to invest. You borrow an additional $5,000 from your broker and invest $10,000 in the stock. How far does the stock price have to fall for you to get a margin call if the maintenance margin requirement is 35%?
- You are bearish on Telecom and decide to sell short 100 shares at the current market price of $50 per share.a. How much in cash or securities must you put into your brokerage account if the broker’s initial margin requirement is 50% of the value of the short position?b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position?Suppose that an investor buys a 100-share put option for $150. It has an exercise price of $38 and the underlying price per share of the stock at expiration is $39. What is the investor's amount of profit or loss, ignoring brokerage fees? and A firm is in need of $2 million in new long-term financing. The firm is trying to decide whether to sell common stock or a convertible bond. The market price of the common stock at present is $42 per share. In order to sell this new issue, the stock has to be underpriced by $2 and sold for $40 per share. Currently the firm has 300,000 shares of common stock outstanding. The firm could also issue 20-year, 10 percent, and $1,000 par-value convertible bonds. They would set the conversion price at $50 per share, and the bond could be sold at par. The earnings for the firm should be $500,000 in the coming year. If the firm chooses the sale of common stock, what will the earnings per share in the coming year be?You are bearish on Telecom and decide to sell short 100 shares at the current market price of $50 per share. How much additional cash must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? Enter your answer without the dollar sign How high can the price of the stock go before you get a margin call if the maintenance margin is 25% of the value of the short position? Round your answer to two decimal places and enter it without dollar sign.