An investor sells short 500 shares of stock at 10 per share, Financial Management

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An investor sells short 500 shares of stock at 10 per share

An investor sells short 500 shares of stock at 10 per share and covers the short position one year later when the price of the stock has declined to 7.5. The margin requirement is 50%. Interest on the margin deposit is 8% effective. A dividend of 0.60 per share is paid at the end of the year. Calculate the yield rate.

A. 19% B. 23% C. 38% D. 46% E. 58%

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Financial Management: An investor sells short 500 shares of stock at 10 per share

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Financial Management: An investor sells short 500 shares of stock at 10 per share

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