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Author Question: You have $5,000 to invest and you are considering short selling shares of Binford Home Improvement ... (Read 325 times)

EAugust

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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.
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Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by EAugust on Apr 25, 2021

fauacakatahaias

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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.
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EAugust

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Reply 2 on: Apr 25, 2021
Thanks for the timely response, appreciate it

31809pancho

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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