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Shares in Company B are currently trading in the market at a price of $95. You believe the stock in Company B is going to
Shares in Company B are currently trading in the market at a price of $95. You believe the stock in Company B is going to fall, so you short 200 shares. The initial margin is 50%.
A) Suppose instead that the share price rises to $100. Answer the following questions: How has the balance sheet changed? What is your margin? What is your holding period rate of return? (Ignore any financing costs.)
B) If the maintenance margin is 30%, at what price you will get the margin call?
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