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Suppose you sell short 75 shares of a stock initially selling for $95. Your margin requirement is 100%. What is the value of the 75
Suppose you sell short 75 shares of a stock initially selling for $95. Your margin requirement is 100%.
What is the value of the 75 shares of stock (this is the amount you will borrow a Time 0)?
If the stock price drops to $80 per share, what is the new value of the 75 shares of stock (this is the amount you will pay back at Time 1)?
What is the total $ amount that you made (or lost) on the trade?
What is your return?
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