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Question 2 (5 Marks) Suppose that the current market price of Budget Air is $90 per share. Billy decides to sell short 5,000 shares of
Question 2 (5 Marks) Suppose that the current market price of Budget Air is $90 per share. Billy decides to sell short 5,000 shares of Budget Air at the current market price of $90 per share. a. Determine the amount of cash or securities which Billy must put into his margin account if the broker's initial margin requirement is 60% of the value of the short position? Show all your calculations. 2 marks b. How high can the price of the Budget Air rise before Billy will get a margin call if the maintenance margin is 40% of the value of the short position? Show all your calculations. 3 marks Show all your calculations
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