Question
Assume that you had $10,000 in cash in your brokerage account on August 1st. Your broker has an initial margin requirement of 60%. You maximize
Assume that you had $10,000 in cash in your brokerage account on August 1st. Your broker has an initial margin requirement of 60%. You maximize your investment in Amazon (AMZN), purchasing shares at the closing price on 8/1/2018. The total amount of shares you can purchase without buying a fractional share is 5.
Assume that you instead decide to short as many shares as possible of Amazon (AMZN) at market close on August 1st. The broker requires a 60% margin on short sales and has a 40% maintenance margin.
Close price 8/1/18 = $1791.17
Close price 8/31/18= $2012.71
A. How many shares did you short sell?
B. Set up your personal balance sheet following the transaction
C. Set up your personal balance sheet as of market close on 8/31/2018 (assuming no margin call)
D. Would you have received a margin call? What price would this occur at?
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