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Maurinko [17]
3 years ago
8

You sell short 500 shares of CF Industries Holdings Inc. that are currently selling at $25.00 per share. You post the 60.00% mar

gin required on the short sale. If you earn no interest on the funds in your margin account, what will be your rate of return after 1 year if CF Industries Holdings Inc. is selling at $23.00
Business
1 answer:
Neko [114]3 years ago
3 0

Answer:

13.33%

Explanation:

Short sale = 500 shares × $25  = $12500

Margin required to be deposited as a percentage of transaction of short sale = $12500 × 60% = $7500

Rate after one year, $23

A short position will be squared by a reverse long (buy) position,

Thus, 500 shares long at $ 23 = 500 shares × 23 = $11,500

Thus, gain on the transaction:

= Short sale value - long buy value

= $12,500 - $11500

= $1000

Since, the contract being derivative wherein only net amount i.e $1000 would be transacted, i.e actually received here, the money invested is $7500 which was deposited in the margin account.

Rate of return after 1 year would be = \frac{Gain\ earned}{Margin\ deposited}  = \frac{1000}{7500} = 13.33%

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Answer and Explanation:

The adjusting entries are shown below:

1. Accounts Receivable $13,680

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(Being Accrued fees earned is recorded)  

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             To Supplies $3,210

(Being Supplies used is recorded)  

3. Wages Expense $1,720

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(Being Accrued wages is recorded)

4. Unearned Rent $4,470 ($13,410 ÷ 3 month)

           To Rent Revenue $4,470

(Being rent earned is recorded)

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6 0
3 years ago
Select three of the following that are listed as sensitive sites in the location and transportation (LT) category that should be
Eduardwww [97]

Answer:

The three sites that are listed as sensitive sites in the location and transportation (LT) category that should be built on are;

1. Wetlands

2. Prime farmland

3. Flood plains

Explanation:

The location and transportation category of credits is based on where the project is located and the accessibility to public transport. Accessibility is looked at in terms of how flexible the area fits in with different modes of public transport. Either by bus, or by train. These credits are awarded based on a number of factors that promotes environmental conservation, accessibility to public transport, and even public parks. The main goal of having this kind of rating systems is in to encourage green building systems. For example, by making public transport easily accessible to the public, the need for personal cars is greatly reduces. This in turn reduces the level of carbon emissions from the cars.

An attempt has also been made to protect building in sensitive locations like;

a. Wetlands: a wetland is distinct area where that is seasonally or permanently flooded with water. Building in such areas should be limited since the water is essential for human survival. Water in such areas also supports various Eco-systems and thus should not be tampered with. Building near wetlands also promotes pollution and thus should be avoided.

b. Prime farmland: this is a designated place by the United States department of agriculture that has the best physical and chemical environmental conditions for agricultural activities. They also need to be protected.

c. Floodplains: this is a low-lying area that forms part of a river basin where the river stretches out across the banks during flooding. Building in such areas should be prohibited since they can cause collapse and loss of lives. Buildings in such areas are also prone to pollution and thus should be avoided.

6 0
3 years ago
Wanna be friends lolll
Ann [662]

Answer:

nope but thanks for asking

Explanation:

6 0
3 years ago
Read 2 more answers
Suppose that the total production of an economy consists of 4 oranges and 10 candy bars, each orange sells for $0.25, and each c
yulyashka [42]

Answer: $6

Explanation:

Total production of oranges= 4

Total production of candy bars=10

Each orange sells for=$0.25

Total market value of orange production=price × quantity

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=$1

Each candy bar sells for= $0.50

Total market value of candy bar production=price of candy bar × quantity of candy bar

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The economy produces oranges and candy bars.

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5 0
3 years ago
Will Co. is expected to pay a dividend of $2 per share at the end of year 1(Div1), and the dividends are expected to grow at a c
Lerok [7]

Answer:

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Explanation:

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v = 20, D1 = 2, r = ?, g = 0.04

20 = 2 / (r - 0.04)

20r - 0.8 = 2

20r = 2 + 0.8

20r = 2.8

r = 2.8/20

r = 0.14

r = 14%

Note: Application of constant growth dividend discount model was required to solve the question

8 0
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