You short sold 750 shares of stock at $64 per share at an initial margin of...
You short sold 750 shares of stock at $64 per share at an initial margin of 75%.The maintenance margin is 35%. What is the highest the stock price can go before you receive a margin call? (Express your solution to two decimals of accuracy.)
Homework Answers
Initial Margin = 750*64*75% = $36,000
Maintenance Margin = 750*64*35% = $16,800
Hence, loss allowed before margin call = 36000-16800
= $19,200
i.e. Rise in price allowed = 19200/750
= $25.6 per share
Hence, highest price before margin call = 64+25.6
= $89.60 per share
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