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Suppose you sell short Tesla which is currently trading at $300 per share. You put $30,000 as cash into your brokerage account with an initial
Suppose you sell short Tesla which is currently trading at $300 per share. You put $30,000 as cash into your brokerage account with an initial margin of 50%. The maintenance margin is 35%.
a)How many shares of Tesla can you sell short? (2 pts)
b)How far can the stock price increase before you get a margin call? (8 pts)
c)Assume Tesla pays a dividend of $10 per share after you sell it short. At what price, will you get a margin call? (5 pts)
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