You sold short 1,000 shares of stock for $21,000. The initial margin requirement is 60%. Current stock price is $27 per share. What is your current margin%?
1- 24.4%
2- 30%
3- 19.6%
4- 52.4%
No. of Shares Sold = 1000
Total Value of Shares Sold = $ 21000
Value of Each Share = $ 21000 / 1000 = $ 21
Now, Initial Margin % = 60 %
Therefore Initial Margin Money Deposited = 60 % x $ 21000 = $ 12600
Now, the new share price is $ 27
Total value of shares today = $ 27 x 1000 Shares = $ 27000
Now, we had sold shares @ $ 21, Now value of shares have increased to $ 27. Therfore our margin deposited earlier is decreased by $ 6 ($ 27 - $ 21 ) Per share sold
Total loss of Margin Money = $ 6 x 1000 Shares =$ 6000
Now Current Margin % = (Inital Margin deposited - Fall in the value of Margin) / Total Value of Shares today
Current Margin % =( $ 12600 - $ 6000 )/ $ 27000
Current Margin % = 24.44 %
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