Intro

You decide to sell short 260 shares at a price of $66.17 each. The inital margin is 50%.

Attempt 1/3 for 10 pts.

Part 1

How much money do you have to contribute to the account?

Correct

Assets		Liabilities & Equity
Sale proceeds (N*P0)	17,204	Value of shares borrowed (N*P)	17,204
Cash (50% of above)	8,602	Equity	8,602
Total	25,806	Total	25,806

Cash contribution:

C = Initial margin * Value of shares borrowed = 0.5 * 260 * 66.17 = 8,602

Attempt 1/3 for 10 pts.

Part 2

If the price rises to $78.38 after 8 months, what is the new percentage margin?