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You open an account to short sell 500 shares of Cisco Systems Inc. which are selling at $30 per share. The initial margin requirement is
You open an account to short sell 500 shares of Cisco Systems Inc. which are selling at $30 per share. The initial margin requirement is 60% and pays an interest of 2%. Maintenance margin is 30%. How much is your initial margin? After a year price of each share falls to $25 per share and it does not pay any dividend. What is your rate of return? After a year price of each share falls to $25 per share and it pays a dividend of $1 per share. What is your rate of return? After a year price of each share increases to $35 per share and it pays a dividend of $1 per share. What is the margin left in your account? What is your rate of return? At what price (after a year) will you receive a margin call? How much more money do you need to put in your account at this price
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