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Construct the equity balance sheet for the original trade

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Reference no: EM133026326

Question - You believe the price of Freeze Frame Co. stock is going to fall, so you short 400 shares at a price of $62. The initial margin is 55 percent. Ignore dividends.

a. Construct the equity balance sheet for the original trade.

b-1. Construct equity balance sheets for a stock price of $57 per share.

b-2. What is your margin?

b-3. What is your effective annual return if you cover your short position at this price in five months?

c-1. Construct equity balance sheets for a stock price of $67 per share.

c-2. What is your margin?

c-3. What is your effective annual return if you cover your short position at this price in five months?

Reference no: EM133026326

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