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4. You are bearish on FBA and decide to sell short 3,000 shares at the current market price of $45 per share. FBA pays
4. You are bearish on FBA and decide to sell short 3,000 shares at the current market price of $45 per share. FBA pays no dividends. a. How much in cash or securities must you put into your brokerage account if the initial margin requirement is 50%? b. If you earn no interest on the funds in your margin account, what will be your rate of return after a week if FBA is selling at $35 per share? c. How high can the price of the stock go before you get a margin call if the maintenance margin is 30%? d. What order and price should you put if you want to limit the loss by $3.5 per share of FBA? (10 marks) 4. You are bearish on FBA and decide to sell short 3,000 shares at the current market price of $45 per share. FBA pays no dividends. a. How much in cash or securities must you put into your brokerage account if the initial margin requirement is 50%? b. If you earn no interest on the funds in your margin account, what will be your rate of return after a week if FBA is selling at $35 per share? c. How high can the price of the stock go before you get a margin call if the maintenance margin is 30%? d. What order and price should you put if you want to limit the loss by $3.5 per share of FBA? (10 marks) 4. You are bearish on FBA and decide to sell short 3,000 shares at the current market price of $45 per share. FBA pays no dividends. a. How much in cash or securities must you put into your brokerage account if the initial margin requirement is 50%? b. If you earn no interest on the funds in your margin account, what will be your rate of return after a week if FBA is selling at $35 per share? c. How high can the price of the stock go before you get a margin call if the maintenance margin is 30%? d. What order and price should you put if you want to limit the loss by $3.5 per share of FBA? (10 marks)
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