Question

An investor sells a stock short for $50 a share. A year later, the investor covers the position at $44 a share. If the margin requirement is 40 percent, what is the percentage return earned on the investment? Round your answer to one decimal places.

Answer 1

Do we assume no interest or brokerage charges and no loss of interest earned on the 40% margin payment? 13.6% is the return for $6 on $44 investment.