Question
Initially, you have $2000 of cash and no other investments in your trading account. You decide to short sell 1 share of stock B. Stock
Initially, you have $2000 of cash and no other investments in your trading account. You decide to short sell 1 share of stock B. Stock Bs current market price is $1000. Stock B is very risky and volatile, so the initial margin requirement is 200% and the maintenance margin requirement is 100%. Is the initial margin requirement satisfied? Answer yes or no and show the calculation. At what price you will receive a margin call? Assume the price is $2000 and you receive a margin call. How much cash do you need to add to your account to satisfy the margin requirement? Assume the price is $2500 and you receive a margin call. But you dont have any cash to add to your account, so you decide to use your $2000 cash to buy back some shares. How many shares do you need to buy to satisfy the margin requirement (assume you can buy fractional shares)? Assume the price is $5000 and you receive a margin call. But you dont have any cash to add to your account. Can you satisfy the margin requirement by buying back stock B? First answer yes or no then explain or show the calculation
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