You sold short 1,000 shares of a stock at $46 per share. The initial margin is...
You sold short 1,000 shares of a stock at $46 per share. The initial margin is 50%.
a) At what stock price would you receive a margin call if the maintenance margin is 35%? (do not consider dividends in question a)
b) Assume that the stock paid a $0.25 dividend per share each quarter, what is the rate of return if you buy to cover the shares at $40 per share at the end of the quarter?
Homework Answers
a) at $ 32.20 stock price , will receive a margin call if the mainence margin is 35%.
b) The rate of return will be $0.4 per share
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