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You have identified a stock (Stock X) that you are certain is overvalued. You currently have $5,828 in your bank account and want desperately to
You have identified a stock (Stock X) that you are certain is overvalued. You currently have
$5,828 in your bank account and want desperately to take advantage of what you see as a
mispricing. At time zero, each share is selling for $62. Thus, you short all your money, along
with the maximum allowed by your broker on margin. The broker also requires a maintenance
margin of 25%. Above what price would you receive a margin call? A)$115.69 B) $71.54 C) $74.40 D) $88.15
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