Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You sell short 300 shares of Microsoft which are currently selling at $30 per share. You post the 50% margin required on the short sale.

You sell short 300 shares of Microsoft which are currently selling at $30 per share. You post the 50% margin required on the short sale. Your broker requires a 30% maintenance margin. Assume you earn no interest on the funds and ignore any dividends. If you earn no interest on the funds in your margin account, what is the (lowest) stock price of Microsoft that will trigger a margin call? (Ignore any dividends)

A.

$31.69

B.

$36.22

C.

$33.10

D.

$37.81

E.

$34.62

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

Financial Markets And Institutions

Authors: Anthony Saunders, Marcia Millon Cornett

1st International Edition

0071181334, 9780071181334

More Books

Students also viewed these Finance questions

Question

Question 1 of 1

Answered: 1 week ago