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2.B. The current market price for ABC is $72 per share. Initial margin is 50%, maintenance...

2.B. The current market price for ABC is $72 per share. Initial margin is 50%, maintenance margin is 35% and there is no margin interest. ABC pays annual cash dividends of $3.75 per share.

2.B.1) You believe the stock price will decrease over the next year and wish to trade exactly one round lot. What trade should you make ? How much margin would you have to post to your account ? At what price would you receive a margin call ?

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Answer #1

Yound 1st rould be trade /UD Shanes. the Ivestor believes a Stock Pnee wnii decrease the trade should be to Sell shont ABC eveS a Total QRTdend Paid = $375 x1oo 。 $375 Margin Call wil be on - $37S$375 is reduced as on short position we need to pay dividend to the person to whom we have made short selling

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