Question

help me please it has 3 parts 1,2,anf 3

thanks

Intro Suppose you just bought the new Windoze 8 and that you realize that it is really bad. As a result you are sure that the price of Microsoft stock (currently trading for $35.5) is going to fall and you tell your broker to short 120 shares. Part 1 Attempt 1/5 for 10 pts. If the broker's initial margin is 50%, what is the value of personal assets you must add to your account to meet the margin requirement? 0+ decimals Submit Part 2 Attempt 1/5 for 10 pts. Assume you have added to your account the value of personal assets determined in part 1. If the broker has a maintenance margin of 30%, what is the highest value the price of Microsoft stock can reach before you are issued a margin call? 1+ decimals

Answer 1

B с 120 $35.5 $4,260 50% $2,130 A 1 Part 1 2 Number of shares shorted 3 Current price of Microsoft stock 4 Value of Microsoft shares shorted 5 Initial margin Personal assets that must be added to meet the 6 margin requirement 7 8 Part 2 9 Account Value 10 Maintenance Margin Requiremnt 11 Margin Call Account Value Highest value the price of Microsoft share reach 12 before margin call is issued 13 14 Part 3 15 Microsoft stock sale price 16 Microsoft stock purchase price 17 Number of shares 18 Profit from the short sale (in $) $6,390 30% 4915.38 $40.96 $35.50 $20 120 $1,860 19

А B 120 1 Part 1 2 Number of shares shorted 3 Current price of Microsoft stock 4 Value of Microsoft shares shorted 5 Initial margin 35.5 =B3*B2 0.5 =B4*B5 6 Personal assets that must be added to meet the margin requirement 7 8 Part 2 9 Account Value 10 Maintenance Margin Requiremnt 11 Margin Call Account Value =B4+B6 0.3 =B9/(1+B10) =B11/B2 12 Highest value the price of Microsoft share reach before margin call is issued 13 14 Part 3 15 Microsoft stock sale price 16 Microsoft stock purchase price 17 Number of shares 18 Profit from the short sale (in $) 35.5 20 120 =(B15-B16)*817 19 20