Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following short sale example: an investor borrows 100 shares of a stock from the broker, put down 50% as the initial margin, and

image text in transcribed

Consider the following short sale example: an investor borrows 100 shares of a stock from the broker, put down 50% as the initial margin, and sells the stock at $50'share in the market. If the maintenance margin is 30%, how much can the stock price rise before the investor gets a margin call? A. 56.79 B. 57.69 C. 59.69 D. 58.79 Regarding the previous question, suppose the stock price later goes up from $50'share to $75/share, put a _may limit the potential loss for the investor? A. limit sell order at $60/share B. limit buy order at $60/share C. stop loss order at $60/share D. stop buy order at $60/share

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Richard Stanton

2nd Edition

1519662106, 978-1519662101

More Books

Students also viewed these Finance questions

Question

Evaluate the combinations 12. C20

Answered: 1 week ago

Question

Answered: 1 week ago

Answered: 1 week ago

Question

What are the basic financial decisions ?

Answered: 1 week ago

Question

What is meant by 'Wealth Maximization ' ?

Answered: 1 week ago