You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high of $53. Your broker tells you that your margin requirement is 55 percent and that the commission on the purchase is $175. While you are short the stock, Charlotte pays a $2.40 per share dividend. At the end of one year, you buy 100 shares of Charlotte at $42 to close out your position and are charged a commission of $165 and 13 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
You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high of $53. Your broker tells you that your margin requirement is 55 percent and that the commission on the purchase is $175. While you are short the stock, Charlotte pays a $2.40 per share dividend. At the end of one year, you buy 100 shares of Charlotte at $42 to close out your position and are charged a commission of $165 and 13 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
Chapter11: Property Dispositions
Section: Chapter Questions
Problem 52P
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You decide to sell short 100 shares of Charlotte Horse Farms when it is selling at its yearly high of $53. Your broker tells you that your margin requirement is 55 percent and that the commission on the purchase is $175. While you are short the stock, Charlotte pays a $2.40 per share dividend. At the end of one year, you buy 100 shares of Charlotte at $42 to close out your position and are charged a commission of $165 and 13 percent interest on the money borrowed. What is your
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