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 300 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
YES! Correct, THANKS for helping me on my review

Viet Thy

  • Member
  • Posts: 329
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

The human body's pharmacokinetics are quite varied. Our hair holds onto drugs longer than our urine, blood, or saliva. For example, alcohol can be detected in the hair for up to 90 days after it was consumed. The same is true for marijuana, cocaine, ecstasy, heroin, methamphetamine, and nicotine.

Did you know?

The most common treatment options for addiction include psychotherapy, support groups, and individual counseling.

Did you know?

The oldest recorded age was 122. Madame Jeanne Calment was born in France in 1875 and died in 1997. She was a vegetarian and loved olive oil, port wine, and chocolate.

Did you know?

Once thought to have neurofibromatosis, Joseph Merrick (also known as "the elephant man") is now, in retrospect, thought by clinical experts to have had Proteus syndrome. This endocrine disease causes continued and abnormal growth of the bones, muscles, skin, and so on and can become completely debilitating with severe deformities occurring anywhere on the body.

Did you know?

The ratio of hydrogen atoms to oxygen in water (H2O) is 2:1.

Intussusception. A short length of small intestine has telescoped into itself. Intussusception. A short length of small intestine has telescoped into itself.
In 2008, the U.S. economy suffered a gaping wound as several trillion dollars were ripped out of it. In 2008, the U.S. economy suffered a gaping wound as several trillion dollars were ripped out of it.
Drake - Hold On Were Going Home Drake - Hold On Were Going Home
Relations Between Iconic Memory, Short-Term Memory, and Long-Term Memory Relations Between Iconic Memory, Short-Term Memory, and Long-Term Memory
Hunger at Home and Abroad Hunger at Home and Abroad
Cost = $99.49; Rate of markup based on cost = 32%. Find the markup and selling price. Cost = $99.49; Rate of markup based on cost = 32%. Find the markup and selling price.
Video: Primate Evolutionary Tree Animation

For a complete list of videos, visit our video library