Old Economy Traders opened an account to shortsell 1,000 shares of Internet Dreams at $60 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $60 to $69.50, and the stock has paid a dividend of $7.80 per share. 
a.  What is the remaining margin in the account? 
Remaining margin  $ 
b1.  What is the margin on the short position? (Round your answer to 2 decimal places.) 
Short margin  % 
b2.  If the maintenance margin requirement is 30%, will Old Economy receive a margin call?  

c. 
What is the rate of return on the investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) 
Rate of return  % 
a). The initial margin was: $60 ×1,000 ×0.50 = $30,000.
As a result of the $9.50 increase in the stock price, Old Economy Traders loses:
$9.50 ×1,000 shares =$9,500.
Moreover, Old Economy Traders must pay the dividend of $7.80/ share to the lender of the shares:
$7.800×1,000 shares = $7,800.
The remaining margin in the investor’s account therefore decreases to:
$30,000  $9,500  $7,800 =$12,700.
b.Margin on short position =Equity/value of share owed
=[$12,700 / $69.50]/ 1,000 = 0.1827, or 18.27%
Because the percentage margin falls below the maintenance level of 30%, there will be a margin call.
c.The rate of return=[Ending equity  Initial equity] / Initial Equity
=[$12,700  $30,000] / $30,000 =$17,300 / $30,000 = 0.5767, or 57.67%
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