Determine the rate of return on short sale

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Reference no: EM131915722

A stock is sold short for a price of $100. The stock pays dividends of $5 and $4. The margin requirement is 50% of the short sale price. The margin account earns an annual rate of 4%. One year from now, the stock is purchased for a price of $80. Determine the rate of return on the short sale.

Reference no: EM131915722

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