Question
Suppose that you just short sold 300 shares of Beta stock for $67 per share. (1) If the initial margin requirement is 55%, how much
Suppose that you just short sold 300 shares of Beta stock for $67 per share. (1) If the initial margin requirement is 55%, how much equity must you invest (suppose you invest in T-bills)? (20 points) (2) Construct the balance sheet that corresponds to the transaction. (20 points) (3) Now suppose the price of the stock falls to $63 per share. What is your current margin percentage? (20 points) (4) The maintenance margin is 30%. At what stock price would you get a margin call? (20 points) (5) when a margin call happens, how to restore initial margin requirements (55%) (20 points)
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