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You short-sell 400 shares of XYZ Co., now selling for $100 per share. You post the...

You short-sell 400 shares of XYZ Co., now selling for $100 per share. You post the 50% margin required on the short sale. If the share price falls to $90 per share and you close your short position, what is your holding-period return on the transaction? (Assume the stock pays no dividends, and there is no interest paid on the posted margin.)

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Answer #1

HOLDING PERIOD = RATE OF RETURN = 20%

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