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You are a financial analyst at a brokerage firm, and one of your clients, Sandra, a seasoned investor, is interested in short selling shares of
You are a financial analyst at a brokerage firm, and one of your clients, Sandra, a seasoned investor, is interested in short selling shares of TechGen Inc. The current market price of TechGen stock is $ per share. Your client wants to short sell shares of TechGen Inc. Your brokerage firm has an initial margin requirement of and a maintenance margin requirement of
a Calculate the amount of cash or securities Sandra must put into her brokerage account to meet the initial margin requirement. mark
b Determine how high the price of TechGen stock can rise before your client receives a margin call, given the maintenance margin requirement. marks
How is margin trading different from short selling? marks
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