Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams from the previous question. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $40 to $50, and the stock has paid a dividend of $2 per share. (LO 3-4)
What is the remaining margin in the account?
If the maintenance margin requirement is 30%, will Old Economy receive a margin call?
What is the rate of return on the investment?
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