Assume you sold short 100 shares of common stock at $70 per share. The initial margin is 50%. what would be the maintena...
Assume you sold short 100 shares of common stock at $70 per share. The initial margin is 50%. what would be the maintenance margin if a margin call is made at a price of $85?
a.40.5%
b.20.5%
c.35.5%
d.23.5%
Homework Answers
In Shorting,
Margin Call Price = S(1 + Initial margin)/(1 + Maintenance margin)
85 = 70(1.50)/(1 + m)
m = 23.5%
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