Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Part 1 Attempt 1/5 for 10 pts. You think the stock price will go down soon, and want to short 63 shares. If the initial

image text in transcribed

Part 1 Attempt 1/5 for 10 pts. You think the stock price will go down soon, and want to short 63 shares. If the initial margin is 50%, what is the minimum additional dollar amount that you have to deposit from your own funds to your brokerage account? 20002.5 Correct Short-selling 63 shares gives us some cash, which must be kept in the brokerage account: Proceeds from short-selling = Number of shares * Stock price = 63 * 635 = 40,005 With an initial margin requirement of 50%, we have to add 50% of the proceeds from short-selling in the form of additional cash to the account: Extra cash = 50% * 40,005 = 20,003 Part 2 Attempt 1/5 for 10 pts. Three months later, the stock price is $662. Tesla paid a dividend of $7 per share during the three months you were short. What is your percentage margin (entered as a decimal number) at the end of three months? 3+ decimals Submit

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

Development Finance Innovations For Sustainable Growth

Authors: Nicholas Biekpe, Danny Cassimon, Andrew William Mullineux

1st Edition

331954165X, 978-3319541655

More Books

Students also viewed these Finance questions