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What is the rate of return from ali baba stock

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Reference no: EM132622677

You are bearish on Ali baba's stock and decide to sell short 100 shares at the current market price of $50 per share.

a. How high can the price of the stock go before you get a margin call if the maintenance margin is 40% of the value of the short position?

b. Assume a year later the price of Ali Baba's stock risen from $50 to $60 and the stock has paid a dividend of $2 per share. What is the rate of return from Ali Baba's stock?

Reference no: EM132622677

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