Question

You believe that the stock of Cara Corporation is overpriced and decide to sell 1,000 shares...

  1. You believe that the stock of Cara Corporation is overpriced and decide to sell 1,000 shares short at $80. You have posted 50% margin as required.

  1. If the stock price drops to $70 per share, what will be the percentage margin on your account?
  2. If the stock price increases to $90 per share, what will be the percentage margin on your account?
  3. How much can the stock price rise before a margin call if the maintenance margin is 25%?
0 0
Add a comment Improve this question Transcribed image text
Know the answer?
Add Answer to:
You believe that the stock of Cara Corporation is overpriced and decide to sell 1,000 shares...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • You are bearish on a technology stock and decide to sell short 100 shares at the...

    You are bearish on a technology stock and decide to sell short 100 shares at the current market price of $36.00 per share. a.) How much in cash or securities must you put into your brokerage account if the broker’s initial margin requirement is 50% of the value of the short position b.) How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short...

  • 1. You are bearish on Telecom stock and decide to sell short 100 shares at the...

    1. You are bearish on Telecom stock and decide to sell short 100 shares at the current market price of $50 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short...

  • Help Save & You are bearish on Telecom and decide to sell short 100 shares at...

    Help Save & You are bearish on Telecom and decide to sell short 100 shares at the current market price of $33 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? Initial margin b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value...

  • You are bearish on Telecom and decide to sell short 100 shares at the current market...

    You are bearish on Telecom and decide to sell short 100 shares at the current market price of $49 per share a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? Initial margin b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short...

  • Today you short sell 500 shares of Stock Z, which is trading at $30 per share.  Stock...

    Today you short sell 500 shares of Stock Z, which is trading at $30 per share.  Stock Z does not pay any dividend, and the interest rate is 0%. (a) The initial margin is 40%.  What is the amount of equity in your account? (b) A day later you receive a margin call, when the price is $40.  What is the maintenance margin?  (You will not receive a margin call if the price is $39.99.) (c) When you receive the margin call at $40,...

  • You are bearish on Telecom and decide to sell short 280 shares at the current market...

    You are bearish on Telecom and decide to sell short 280 shares at the current market price of $100 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? (Round your answer to the nearest whole number) or to be put into b. How high can the price of the stock go before you get a margin call if...

  • You are bearish on Telecom and decide to sell short 100 shares at the current market...

    You are bearish on Telecom and decide to sell short 100 shares at the current market price of $36 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? X Answer is complete but not entirely correct. Initial margin $ 5,000 b. How high can the price of the stock go before you get a margin call if the...

  • You are bearish on Telecom and decide to sell short 100 shares at the current market price of $45 per share. a. How muc...

    You are bearish on Telecom and decide to sell short 100 shares at the current market price of $45 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? Initial margin b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short...

  • You are bearish on Telecom and decide to sell short 100 shares at the current market...

    You are bearish on Telecom and decide to sell short 100 shares at the current market price of $50 per share. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? Enter your answer without a dollar sign Your Answer: Answer Question 5 (1 point) continued from the previous question) How high can the price of the stock go before you get...

  • You believe that Rose, Inc., stock is going to fall and you’ve decided to sell 1,000...

    You believe that Rose, Inc., stock is going to fall and you’ve decided to sell 1,000 shares short. If the current share price is $66, construct the equity account balance sheet for this trade. Assume the initial margin is 100 percent. (Input all amounts as positive values. Omit the "$" sign in your response.)   Assets Liabilities and account equity   Proceeds from sale $    Short position $      Initial margin deposit    Account equity      Total $    Total $   

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT