Question

You short-sell 50 shares of XYZ stock at $100 per share. Your broker's initial margin requirement is 50% of the value of your short position. You put up cash to satisfy the initial margin requirement.

a) What will be your rate of return (after 1 year) if XYZ stock sells at $110 a share? Assume that you do not earn any interest on your funds in the margin account and that the stock pays a dividend of $1.50 a share at the end of the year.

b) If the maintenance margin is 40%, how high can the stock price rise before you receive a margin call from your broker? Ignore the dividend (for part b) only).

Answer #1

You sell 100 short shares of stock at $60 per share.
Initial Margin Requirement (IMR%)= 50%.
Maintenance margin for short sale of stock with price >
$16.75 is 30% of market (or position) value
QUESTIONS:
1. What is the price for margin call?
2. What is the new market value of the position?(Note: we
haven’t deposited any add’l cash yet)

Donald opened an account to short-sell 2,700 shares of XYZ at
$75 per share. The initial margin requirement was 50%. (The margin
account pays no interest.) A year later, the price of XYZ has risen
from $75 to $85, and the stock has paid a dividend of $1.50 per
share.
a. What is the remaining margin in the account?
(Round your answer to the nearest whole
dollar.)
b. If the maintenance margin requirement is 30%,
will Donald receive a margin...

You sold short 400 shares of a stock for $60 per share. Your
broker’s initial margin requirement is 60%. The broker’s
maintenance margin requirement is 35%. You initially want to put up
as little capital (money) as possible to support the short sale.
A.) How much capital must you have in your account before you can
make the short sale? B.) If the stock price goes to $70 per share,
will you receive a margin call? Show your work to...

You are bearish on IBM and decide to sell short 100 shares at
the current market price of $100 per share. The broker's initial
margin requirement is 50% of the value of the short position. The
maintenance margin is 20% of the value of the short position. How
high can the price of the stock go before you get a margin
call?

You purchased 100 shares of common stock on margin at $45 per
share. Assume the initial margin is 50% and the stock pays no
dividend. What would the maintenance margin be if a margin call is
made at a stock price of $30? Ignore interest on margin. A.0.33
B.0.55 C.0.43 D.0.23 E.0.253. Assume you purchased 200 shares of GE
common stock on margin at $70 per share from your broker. If the
initial margin is 55%, how much did you...

Suppose that you sell short 500 shares of Intel, which is
currently selling for $20 per share. Your broker requires 40%
initial margin in short sales, which you covered using the T-bills
in your account. Assume zero interest rate charged by the broker
and that the maintenance margin is 20%
A. How high can Intel's price rise before you get a margin
call?
B. How much money would you have to put into your account in
order to satisfy the...

You are bearish on Telecom and decide to sell short 240 shares
at the current market price of $85 per share.
a. How much in cash or securities must you put into your
brokerage account if the broker's initial margin requirement is 50%
of the value of the short position? (Round your answer to the
nearest whole dollar.)
Cash or securities to be put into brokerage account :
______________
b. How high can the price of the stock go before...

You purchased 500 shares of stock XYZ for $80 per share. You
borrowed $15,000 from your broker to help pay for the purchase. A.)
How much initial percent margin do you have in your account? B.) If
your broker does not charge any interest payments on margin loans,
how low can the price of the stock XYZ fall before you receive a
margin call? Your broker has a maintenance margin requirement of
40% for stock XYZ.
Please show your work!...

You just bought 200 shares of a stock priced at $48 per share
using 50% initial margin. The broker charges 4% annual interest
rate on the margin loan and requires a 30% maintenance
margin. One year later stock price dropped to 31 and you
recieved margin call, to restore your margin to the initial margin
level, how much would you need to deposit?
Answer ___+/- ____
You sell short 100 shares of company A which are currently
selling at $32 per...

1)
You sell short 200 shares of Doggie Treats Inc. that are currently
selling at $25 per share. You post the 50% margin required on the
short sale. If your broker requires a 30% maintenance margin, at
what stock price will you get a margin call? (You earn no interest
on the funds in your margin account, and the firm does not pay any
dividends.)
A.
$32.25
B.
$31.50
C.
$28.85
D.
$35.71
2) You purchased 250 shares of common...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 57 seconds ago

asked 58 seconds ago

asked 1 minute ago

asked 5 minutes ago

asked 7 minutes ago

asked 9 minutes ago

asked 11 minutes ago

asked 15 minutes ago

asked 15 minutes ago

asked 15 minutes ago

asked 15 minutes ago

asked 17 minutes ago