Ask Question
10 December, 23:38

You believe the price of Rose, Inc., stock is going to fall and you've decided to sell 1,400 shares short. If the current share price is $52, construct the equity account balance sheet for this trade. Assume the initial margin is 60 percent

+4
Answers (1)
  1. 11 December, 02:11
    0
    Assets

    Proceeds from sale: $72,800

    Initial margin deposit: $43,680

    Total Assets: $116,480

    Liabilities and Account Equity

    Short Position: $72,800

    Account Equity: $43,680

    Total: $116,480

    Explanation:

    Given:

    Shares = 1,400

    Current Shares Price = $52

    Initial Margin = 60%

    Calculating Assets:

    Proceeds from Sales = Shares * Current Price

    Proceeds = 1,400 * $52

    Proceeds = $72,800

    Initial Margin Deposit = Proceeds * Initial Margin

    Initial Margin Deposit = $72,800 * 60%

    Initial Margin Deposit = $43,680

    Total Assets = $43,680 + $72,800

    Total Assets = $116,480

    Calculating Liabilities:

    Short Position = Shares * Current Price

    Short Position = 1,400 * $52

    Short Position = $72,800

    Account Equity = Short Position * Initial Margin

    Account Equity = $72,800 * 60%

    Account Equity = $43,680

    Total = $43,680 + $72,800

    Total = $116,480
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “You believe the price of Rose, Inc., stock is going to fall and you've decided to sell 1,400 shares short. If the current share price is ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers