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You plan to sell short Company KLM stock Initial Margin 50% Maintenance Margin 30% Questions: Suppose your sell short 1000 shares of Company KLM at
- You plan to sell short Company KLM stock
- Initial Margin 50%
- Maintenance Margin 30%
Questions:
- Suppose your sell short 1000 shares of Company KLM at $120. What is the minimal amount you need to contribute to your margin account?
- If the stock price rises to $130, what is your percent margin in your account?
- How much can the price of Company KLM stock rise before you get a margin call?
- If the stock price rises to $150, how much additional cash must you invest in your margin account to satisfy the maintenance margin?
- If the stock price drops to $100, what is your rate of return on your initial investment?
- If the stock price drops to $90 and you have settle your position (buy back the stock), what is your rate of return on your initial investment?
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
13th edition
1439078106, 111197375X, 9781439078105, 9781111973759, 978-1439078099
