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The current price of Cornersville Coffins Inc. (CCI) is 91.25. You think CCI is probably a dead-end investment (i.e. you are bearish on CCI) and
The current price of Cornersville Coffins Inc. (CCI) is 91.25. You think CCI is probably a dead-end investment (i.e. you are bearish on CCI) and have decided to short 500 shares. The initial margin is 55% and the maintenance margin is 35%.
A How high can the price increase before you will receive a margin call? (3 points)
B. If the price rises to $110, what will be the amount of the margin call? (4 points)
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