For short sales, the collateral or margin that a trader must post must be at least 50% of the value of the stocks that are borrowed. This too is held on account at a brokerage firm.

XYC common shares were sold to IPO investors at $16 per share. Given the initial sale of 2.72 million shares, XYC raised $40.52 million, net of a $3 million fee paid to the IPO underwriters. On its first day as a public company, XYCs stock closed at $37.25.

One trade Jessica considers is shorting 1,000 shares of XYC stock at the close of the day of its IPO. By what percentage will the equity in the trade increase if the stock goes to $30.00 per share afterward?

For short sales, the collateral or margin that a trader must post must be at least 50% of the value of the stocks that are borrowed. This too is held on account at a brokerage firm.

Group of answer choices

20%

29%

39%

25%