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Question 2 O out of 5 points You have sold short 40 shares of company LOL at $82. Your initial margin is 50% and your
Question 2 O out of 5 points You have sold short 40 shares of company LOL at $82. Your initial margin is 50% and your maintenance margin is 30%. A few weeks later, just after the company paid $2 dividends, you hit the maintenance margin (exactly) and receive a margin call. How much money do you have to add to your account to bring the margin back to the initial level? Selected Answer: 752 Response This is a multi-step problem. Feedback: 1. Calculate the price at which you hit the maintenance margin. You will have the short sale proceeds and the initial margin on your account. Remember that short seller have to pay the dividends to the lender, so it becomes part of what you owe. 2. Once you know the new share price, write down the margin equation again, adding "x" to your account and equating the % margin ratio to the initial margin. Solve for x. Remember the formula: % margin = (Account value - what you owe) MVshares
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