This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: You have $5,000 to invest and you are considering short selling shares of Binford Home Improvement ... (Read 242 times)

EAugust

  • Hero Member
  • *****
  • Posts: 550
on: Apr 25, 2021
You have $5,000 to invest and you are considering short selling shares of Binford Home Improvement or purchasing 10 put options on the shares. The stock price is currently $50. If you short sell, then your broker requires you to deposit 50% margin into your brokerage account. So, you can afford to short sell 200 shares of Oceanic. The proceeds will be deposited in your account and you will have to deposit an additional $5,000 of margin. The put option expires in six months, has a strike price of $50 and has a premium of $5 (per share). Assume that the stock price falls to $40 by the option expiry date. What is the ratio of the rate of return on the puts over the return on the short sale? In the case of the short sale, treat your margin deposit as your investment.
◦ 1.0
◦ 2.5
◦ 5.0
◦ 10.0
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by EAugust on Apr 25, 2021

fauacakatahaias

  • Sr. Member
  • ****
  • Posts: 353
Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 55% of students answer this correctly


EAugust

  • Member
  • Posts: 550
Reply 2 on: Apr 25, 2021
Thanks for the timely response, appreciate it

helenmarkerine

  • Member
  • Posts: 324
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

There are approximately 3 million unintended pregnancies in the United States each year.

Did you know?

Approximately 15–25% of recognized pregnancies end in miscarriage. However, many miscarriages often occur before a woman even knows she is pregnant.

Did you know?

According to research, pregnant women tend to eat more if carrying a baby boy. Male fetuses may secrete a chemical that stimulates their mothers to step up her energy intake.

Did you know?

Green tea is able to stop the scent of garlic or onion from causing bad breath.

Did you know?

Limit intake of red meat and dairy products made with whole milk. Choose skim milk, low-fat or fat-free dairy products. Limit fried food. Use healthy oils when cooking.

Levels of Processing Affects Long-Term but not Short-Term Memory Levels of Processing Affects Long-Term but not Short-Term Memory
(Left panel) The transition level (TL) for moving out of the parental home for 240 young men and ... (Left panel) The transition level (TL) for moving out of the parental home for 240 young men and ...
Short-wavelength flux is reflected by Earth Short-wavelength flux is reflected by Earth
Selling Today: Partnering to Create Value (Manning/Ahearne/Reece) Selling Today: Partnering to Create Value (Manning/Ahearne/Reece)
Short Table of Laplace Tranforms Short Table of Laplace Tranforms
Video: Studying the Left and Right Brain Independently

For a complete list of videos, visit our video library