Investment Analysis and portfolio management

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Selling short. Assume that you sold short 100 shares of the stock. Assume that you sell short on the first day of Week 1 and buy back the stock on the last day of Week 4. Because a short sale involves borrowing, the margin rules apply: assume that the margin requirement is 50% and that the maintenance margin is 30%. Track the price of the stock each week,(bac price: $11.30) noting the market price of the stock and your potential loss at the end of each week. Calculate the return on your short sale transaction, assuming a commission on buying and selling of 0.5% of the market value of the stock. Be sure to factor in any dividends paid on the stock during the four-week period and the interest paid on the borrowed funds. Show your calculations. Iam having a very difficulty trying to solve, Please help me with the calculation Jan 09 2014 05:02 PM

 

Solution ID:608935 | This paper was updated on 26-Nov-2015

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