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

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 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)

You short sell 1000 shares of Internet Dreams. The initial
margin requirement is 50%. A year later, the price has risen up
from $40 to $50 and the stock has paid a dividend of
$3.
a) What is the remaining margin on the account?
b) If the maintenance margin requirement is 30%, will you
receive a margin call?
c) What is the rate of return on this investment?

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 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 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...

Suppose that you sell short 1000 shares of IBM , currently
selling for $50 per share, and give your broker $30,000 to
establish your margin account. The maintenance margin is 35%.
a) if the price of IBM immediatley changes to $55, do you
receive a margin call? Explain
b) If the maintenance margin is 35%, how high can IBM's price
rise before you get a margin call?
Please show work

You purchased 100 shares of common stock on margin at $40 per
share. Assume the initial margin is 50% and the stock pays no
dividend. What would the maintenance margin be of a margin call is
made at a stock price of $25? Ignore interest on margin. Make sure
that you interpret your numerical answer (i.e. explain why would
you get the call at this rate).

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...

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