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Vanyuwa [196]
2 years ago
5

Old Economy Traders opened an account to short-sell 1,900 shares of Internet Dreams at $58 per share. The initial margin require

ment was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $58 to $60, and the stock has paid a dividend of $3.50 per share. a. What is the remaining margin in the account
Business
1 answer:
a_sh-v [17]2 years ago
7 0

Answer:

45.67%

Explanation:

Calculation to determine the remaining margin in the account

First step is to calculate the 1 year price

1 year price=1900 shares*$58 per share

1 year price = $110,200

Second step is to calculate the Equity

Margin requirement is 50% so equity = 50%*$110,200

Margin requirement is 50% so equity =$55,100

Third step is to calculate the 1 year later price increase of 60

1 year later price increase to 60

$1900 shares*$60 per share =114,000

Fourth step is to calculate the Dividend

Dividend =$3.50 *1900

Dividend=$6,650

Now let calculate the Margin

Margin = $55,100/($114,000+$6,650)

Margin =$55,100/$120,650

Margin= 45.67%

Therefore the remaining margin in the account is 45.67%

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Public expenditure, in economy, indicates the complex of money of public origin that is used by the State in public goods and / or public services aimed at pursuing public purposes, regardless of the nature (public or private) of the obligation that is the title . These are therefore the exits by the state and therefore an item of liabilities within the state budget, the coverage of which is necessarily entrusted to taxation on taxpaying citizens or public debt. Otherwise, the repercussions are of an inflation or devaluation type, depending on the domestic or foreign destination of the capital.

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