What is your effective annual return if you cover your


You beleieve the stock in Freeze Fame Co. is going to fall, so you short 600 shares at a prive of $72. The initial margin is 50 percent. Construct the equity balance sheet for the original trade. Now construct equity balance sheets for a stock prive of $63 and a stock price of $77. What is your margin at each of these stock prices? What is your effective annual return if you cover your short position at each of these prices in 5 months?

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Financial Management: What is your effective annual return if you cover your
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