Question
1) You sell short 400 shares of stock at $136.59 per share. If the initial margin requirement is 43%, how much equity must you put
1) You sell short 400 shares of stock at $136.59 per share. If the initial margin requirement is 43%, how much equity must you put in the account?
2) You sell short 200 shares of Doggie Treats Inc. which are currently selling at $64.43 per share. You post the 50% margin required on the short sale. If your broker requires a 39% maintenance margin, at what stock price will you get a margin call? (You earn no interest on the funds in your margin account and the firm does not pay any dividends.)
3) You purchased 200 shares of MSFT common stock on margin at $128.5 per share. Assume the initial margin is 45% and the maintenance margin is 25%. You will get a margin call if the stock drops below ________. (Assume the stock pays no dividends and ignore interest on the margin loan.)
4) You short-sell 268 shares of Alibaba, at $76.6 per share. If you wish to limit your maximum loss to $5,000, you should place a stop-buy order at ____. Ignore any dividends, trading costs, and margin interest.
5) You purchase 300 shares of HON at $92.2 per share on margin with 75% margin ratio (25% is financed by debt). If the price changes to $65.3 after 3 months (90 days), and the interest rate on the margin loan is 8%, what is your net percentage return on this position?
Assume that your brokerage uses a 365 day convention for calculating daily interest rates, and that interest compounds daily.
Enter answer in percents, positive for gains, negative for losses, accurate to 2 decimal places.
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