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 318 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
Gracias!

ebonylittles

  • Member
  • Posts: 318
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Normal urine is sterile. It contains fluids, salts, and waste products. It is free of bacteria, viruses, and fungi.

Did you know?

As the western states of America were settled, pioneers often had to drink rancid water from ponds and other sources. This often resulted in chronic diarrhea, causing many cases of dehydration and death that could have been avoided if clean water had been available.

Did you know?

The most destructive flu epidemic of all times in recorded history occurred in 1918, with approximately 20 million deaths worldwide.

Did you know?

Studies show that systolic blood pressure can be significantly lowered by taking statins. In fact, the higher the patient's baseline blood pressure, the greater the effect of statins on his or her blood pressure.

Did you know?

Hip fractures are the most serious consequences of osteoporosis. The incidence of hip fractures increases with each decade among patients in their 60s to patients in their 90s for both women and men of all populations. Men and women older than 80 years of age show the highest incidence of hip fractures.

The characteristically small and relatively short-legged reindeer from Svalbard The characteristically small and relatively short-legged reindeer from Svalbard
(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 ...
Martha Rosler, Gladiators, from the series House Beautiful: Bringing the War Home. 2004 Martha Rosler, Gladiators, from the series House Beautiful: Bringing the War Home. 2004
Hunger at Home and Abroad Hunger at Home and Abroad
Calculus homework take home Calculus homework take home
Short form of amino acids Short form of amino acids
Video: Brain Lobes Animation

For a complete list of videos, visit our video library