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You decide to sell short 100 shares of Charlotte horse farms when it is selling at its yearly high of R56. Your broker tells you that your margin requirement is 45 percent and that the commission on the purchase is R155. While you are short the stock  Charlotte pays a R2.50 per share dividend. At the end of one year, you buy 100 shares of Charlotte at R45 to close out your position and are charged a commission of R145 and 8 percent interest on the money. what is your rate of return on the investment?

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1.You buy 100 shares of Starbucks at $55. At the end of the year it is selling for $65. What is the percentage return of your investment?

2.In problem one you make the same investment. However, you do not have $5,500 to invest so you open a margin account. You are able to put up 60% per share and borrow the rest from the broker. The broker charges you brokers call (2%) plus 1. What is your return at the end of the year?

3.Redo 1 and 2 assuming that Starbucks paid a $1.50 dividend.

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5.If the broker requires a maintenance margin of 35%, at what price will you get a margin call?

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2 parts

A. Choose a stock from NYSE or NASDAQ. Assume you have shorted 1000 shares of that stock six month ago. Assume you cover your short during this coming week when you post (Your Holding period = 6 months). Estimate your profits and loss. (You need to find out from yahoo.com your stocks price six month ago)

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2 parts

A. Choose a stock from NYSE or NASDAQ. Assume you have shorted 1000 shares of that stock six month ago. Assume you cover your short during this coming week when you post (Your Holding period = 6 months). Estimate your profits and loss. (You need to find out from yahoo.com your stocks price six month ago)

B. Choose another publicly traded company. Assume you had bought 1000 share of that stock on the close of the market six months ago. Assume at the time of purchase you borrowed 50 percent of total investment from your broker (buying on margin). Assume you sell your 1000 shares during this coming week (Your Holding period = 6 months. Assuming your broker call money rate is 8% per year, what is your holding period return in percent? What is your annualized return in percent? (Hint: you need to find out from yahoo.com your stock

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