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SashulF [63]
3 years ago
9

Old Economy Traders opened an account to short-sell 1,550 shares of Internet Dreams at $74 per share. The initial margin require

ment was 52%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $74 to $81, and the stock has paid a dividend of $4 per share.
Required:
a. What is the remaining margin in the account?
b. If the maintenance margin requirement is 30%, will Old Economy receive a margin call?
c. What is the rate of return on the investment?
Business
1 answer:
svetlana [45]3 years ago
8 0

Answer:

A.37%

B.No because the margin is above the requirement at 37%.

C.-118%

Explanation:

Old Economy Traders

a.

1,550 shares*$74 per share = 114,700

margin requirement is 52% so equity =59,644

1 year later price increase to 81

$1550 shares*$81 per share = 125,550

Dividend = $4*1550 = 6,200

Margin = 114,700/131750 = 37%

b.

No because the margin is above the requirement at 37%.

c.

Price of 1550 stock year 1 at 81$/share = 125,550

114,700 – 125,500 = -10800

Rate of return = (-10800 -59,644)/59,644= -118%

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A) Scan the highway far and wide.

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3 years ago
the xyz block company purchased a new office computer and other depreciable computer hardware for $12,000. during the third year
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Present worth is $7,944 ( Considering some assumptions )

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Now As all these event happened in the past and it is assumed that we are standing at the end of year 3, the present worth of the all these depreciation is actually the future value of these deduction because it was made earlier.

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1. General journal entries to record each transaction.

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Cash                      $103,000

Common Stock                      $103,000

Jan. 2                         Dr.             Cr

Inventory              $38,000

Account Payable                   $38,000

Jan. 4                           Dr.             Cr

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Jan. 15                            Dr.             Cr

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Cash                                              $33,000

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Cost of Goods Sold   $6,300

Inventory                                     $6,300

Jan. 24                            Dr.             Cr

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