Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are bearish on Telecom and decide to sell short 1 7 0 shares at the current market price of $ 7 0 per share.

You are bearish on Telecom and decide to sell short 170 shares at the current market price of $70 per share.
Required:
How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position?
How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Financial Management

Authors: Brigham, Daves

10th Edition

978-1439051764, 1111783659, 9780324594690, 1439051763, 9781111783655, 324594690, 978-1111021573

More Books

Students also viewed these Finance questions

Question

=+2. Why did the Chinese move to a managed-float system in 2005?

Answered: 1 week ago