Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Initial margin requirement 0 . 5 0 Maintenance margin requirement 0 . 3 0 Shares 1 , 0 0 0 You shorted AMC at $

Initial margin requirement 0.50
Maintenance margin requirement 0.30
Shares 1,000
You shorted AMC at $40.88 a share on August 18,2023. You closed out the short at $11.07 on August 28,2023.
How much did you have to have in your account before you shorted the stock?
What was your net cash inflow after you closed out the short?
What was your return on this short?
Assuming you don't close out the short, how high can the stock go before you get a margin call?
The stock price increases to $45 a share.
5. What is the amount of your margin call?
The stock price increases to $50 a share.
6. What is the amount of your margin call?
7. If you meet the margin call, what was your new equity?
8. If you can't meet the margin call, what is the maximum market value you have?
9. What is the reduction needed?
10. How many shares will your broker buy?
11. What is the actual reduction?
12. What are your new total assets?
13. What is your new loan?
The stock price increases to $80 a share.
14. What is your equity?
15. What is your margin call?
16. If you can't meet the margin call, how many shares will your broker buy?
17. What will the amount of your remaining loan?
18. What will be your new total assets?
Type your answers in the boxes below.
Initial margin requirement
Net cash inflow
Return
How high can it go?
Amount of margin call
Amount of margin call
New equity
Maximum value
Reduction needed
Number of shares
Actual reduction
New total assets
New loan
\table[[$29,810
Only 14-18 needed !
image text in transcribed

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: Jack Kapoor, Les Dlabay, Robert Hughes

4th Edition

0256147175, 978-0256147179

More Books

Students also viewed these Finance questions

Question

Explain how SIHRM is linked to different global business strategies

Answered: 1 week ago