Finance Assignment | Professional Writing
May 30th, 2020
Question 5 (8 marks) Eight months ago, you sold short 1,000 shares of ABC Company at $30 per share. The initial margin requirement is 50% and maintenance margin is 30%. Ignoring borrowing cost of the shares, a) calculate the price level that you receive margin call. (2 marks)
b) calculate the (i) holding period percentage return and (ii) annual percentage return (APR) of your margin position if you close the margin position at $28 today, immediately after dividend of $1 per share was paid by the Company (6 marks)
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