What is your rate of return-interest paid in margin account

Assignment Help Financial Management

Reference no: EM13877807

You open a brokerage account on January 1 and sell short 500 shares of Apple Computer at $163.39 per share. The initial margin requirement is 50%. Assume that Apple pays an annual dividend on December 31 of $5.50 per share, the price of the stock is now $140 per share; assume you cover your short position on December 31. What is your rate of return? There is no interest paid in this margin account

Reference no: EM13877807

Questions Cloud

Organizations build and manage prisons : Which of the following levels of government and/or organizations build and manage prisons?

Expected to sell for immediately after it pays the dividend : OwenInc has a current stock price of $14.50 and is expected to pay a $0.85 dividend in one year. If OwenInc's equity cost of capital is 12%, what price would OwenInc's stock be expected to sell for immediately after it pays the dividend?

Investor be expected to pay per share five years into future : A stock is expected to pay $0.80 per share every year indefinitely. If the current price of the stock is $18.90, and the equity cost of capital for the company that released the shares is 6.4%, what price would an investor be expected to pay per shar..

Total return to ahmed from owning the stock : Ahmed purchased a stock for $45 one year ago. The stock is now worth $65. During the year, the stock paid a dividend of $2.50. What is the total return to Ahmed from owning the stock?

What is your rate of return-interest paid in margin account : You open a brokerage account on January 1 and sell short 500 shares of Apple Computer at $163.39 per share. The initial margin requirement is 50%. Assume that Apple pays an annual dividend on December 31 of $5.50 per share, the price of the stock is ..

Calculate the market risk premium : A stock has the same level of systematic risk as the market. The stock has an expected return of 14%. The risk free rate is 5%. Calculate the market risk premium.

Brokerage account-what is your new margin balance : You open a brokerage account and purchase 200 shares of Google at $443.05 per share. You borrow 40% from your broker to help pay for the purchase. The interest rate on the loan is 8%. One year after purchase, Google’s price is $320. What is your new ..

Making the additional payment and shortening the loan : A loan is being repaid with 20 annual payments of $180 each. At the time of the 5th payment, the borrower is allowed to pay an extra $300 and to repay the remaining outstanding balance over the next 11 years with revised level annual payments. If the..

What is the portfolio turnover rate : The composition of the Dominion Fund portfolio is as follows: STOCK SHARES PRICE A 200,000 $31 B 300,000 $46 C 400,000 $14 D 600,000 $23 Assume that during the year the portfolio manager sells all of the holdings of Stock D and replaces it with 200,0..

User Account

All Pages