Old Economy Traders opened an account to short sell 1,000 shares of Internet Dreams from the previous
Old Economy Traders opened an account to short sell 1,000 shares of Internet Dreams from the previous problem. 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.;a. What is the remaining margin in the account?;b. If the maintenance margin requirement is 30%, will Old Economy receive a margin call?;c. What is the rate of return on the investment?;(BODIE, Zvi. Investments, 8th Edition. Irwin/McGraw-Hill, 062008. 11.9.3).
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