Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. question 4 the stock of abc inc is trading at $50.

Question 4 The stock of ABC Inc is trading at $50. You short sold 350 shares of...

80.2K

Verified Solution

Question

Finance

Question 4

The stock of ABC Inc is trading at $50. You short sold 350shares of ABC at this price. However, price increased to $55, atwhich point you decided to close the trade. What was yourpercentage return? The initial margin rate is 75%.

Question 5

Consider the short sale trade in the previous question. If yourbrokerage requires a maintenance margin of 40%, at what price willyou get a margin call? The initial margin rate is 75%.

Question 6

You find that in a normal year, the S&P500 index gives areturn of 12%. However, you think that there is a 40% probabilityof the economy going into recession next year. If that happens, youpredict that the index return will be 2%. What is the expectedreturn on the S&P500 next year?

Answer & Explanation Solved by verified expert
3.7 Ratings (658 Votes)
    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Algebra
1.2K views

Kara invested her $54, 000 bonus in an account earning 6.7% annual interest that is...

Chemistry
1.2K views

Balance the following oxidation-reduction reactions using the half-reaction method. a) S2-(aq) + NO3-(aq) ---> S8(s) + NO2(g) acidic...

Medical Sciences
1.2K views

what is thymus

Electrical Engineering
1.2K views

Explain how the performance of induction motor can be predicted by circle diagram. Draw the circle diagram...

Geometry
1.2K views

x A section of a roller coaster track forms a parallelogram ABCD If m2ABC 72...

Basic Math
1.2K views

Marissa wants to blend candy selling for $1.20 per pound with candy costing $2.70 per...

Calculus
1.2K views

What is the period of the following function y cos 50 T

Accounting
1.2K views

Keep-or-Drop-or-Add for Service Firm, Complementary Effects, Traditional Two brothers, Enzo and Pietro, opened the Italian...

Accounting
1.2K views

Q2: Tyler com. Began doing business with Security bank on October 1. On that date...

Finance
1.2K views

The yield to maturity of a one- year, $1,000 bond that sells for $710 that...

Finance
1.2K views

a. How much would you be willing to pay today for an investment that pays...

Finance
1.2K views

Determine the semi-annual interest payment for the following three bonds: 5.5 percent coupon corporate bond,...