Question
Suppose that you sell short 1000 shares of IBM , currently selling for $50 per share, and give your broker $30,000 to establish your margin
Suppose that you sell short 1000 shares of IBM , currently selling for $50 per share, and give your broker $30,000 to establish your margin account. The maintenance margin is 35%.
a) if the price of IBM immediatley changes to $55, do you receive a margin call? Explain
b) If the maintenance margin is 35%, how high can IBM's price rise before you get a margin call?
Please show work
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ISE Foundations Of Financial Management
Authors: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
18th International Edition
1265074658, 9781265074654
