Question
5a. Suppose you sell short 200 shares of XXX-stock at $73.50 per share. Your broker requires 50% margin for the short account. i. What was
5a. Suppose you sell short 200 shares of XXX-stock at $73.50 per share. Your broker requires 50% margin for the short account. i. What was your expectation about the XXX-stock price? Put it differently, what was the reason you sold short of XXX-stock at $73.50? ii. How much money (or securities worth) do you need to put into your brokerage account? Show your work. iii. Suppose the share price goes up to $74.88. How much money will you make? And how much money will you have in your brokerage account? iv. Suppose the share price goes down to $69.20. How much money will you make? And how much money will you have in your brokerage account? Q-6. Today, (March-17), suppose you sold short 250 shares of CCC-stock at $35.50 per share. Your broker requires 40% margin for the short account. B) i. Suppose on April-01, the CCC-stock pays $1.40 dividend per share. Who receives the dividend? And Why? (Just explanation, no calculation!) ii. Suppose on April-17, you close your short sale account when the stock price is $34.75. How much money did you make out of this short sale? How much money do you have in your brokerage account after you closed out the short sale account?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started