Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

You short sell 500 shares of Yahoo stock at a price of $23 per share, using the full initial margin of 50%. After a surprisingly

You short sell 500 shares of Yahoo stock at a price of $23 per share, using the full initial margin of 50%. After a surprisingly positive earnings announcement, the stock price rises to $31 per share. Your broker immediately gives you a margin call and requests that you add additional cash to your position to get back to the required maintenance margin level of 35%. How much cash do you need to add to your account?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Finance questions