Ask Question
BusinessBusiness
16 April, 00:39

You short sold 1,100 shares of stock at a price of $29 and an initial margin of 55 percent. If the maintenance margin is 40 percent, at what share price will you receive a margin call? What is your account equity at this stock price?

+2
Answers (1)
  1. 16 April, 04:37
    0
    No of stock = 1100

    Price of Stock = 29

    Short sale = 31900

    Initial Margin % = 55%

    Initial Margin = 17545

    Total value = 49445

    The earnings of the sale is 31900, which is deposited in our account for a total account value of $49,445 (31900+55%)

    Maintenance Margin = 40%

    Margin Call Value = 49445 / (1+0.4)

    Margin Call Value = 35317.86

    Price per share = 35317.86 / 1100

    Price per share = 32.11

    So a margin call will be triggered when the price of the shorted security rises to $32.11

    Margin Call Price = 32.11

    Account Equity = 32.11*1100

    Account Equity = 35318
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “You short sold 1,100 shares of stock at a price of $29 and an initial margin of 55 percent. If the maintenance margin is 40 percent, at ...” 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
You Might be Interested in
Which of the following items could be found on a statement of shareholders' equity? a. Reasons for retained earnings increases or decreases. b. A reconciliation of beginning to ending cash. c. The market value of the firm's common stock. d.
Answers (1)
Ethical dilemmas can complicate decisions where there is no legal precedent or established procedures. A. TRUE B. FALSE
Answers (1)
American airlines traded eight 747s for twelve dc-10s owned by united airlines. this transaction is an example of
Answers (1)
It is important for a therapist to develop a trusting bond with clients in order for treatment to be effective. t/f
Answers (2)
Two engineers submitted sealed bids to a prospective client for a design project. The client told Engineer A how much Engineer B had bid and invited Engineer A to beat that amount.
Answers (1)
New Questions in Business
Heather's interest and gains on investments for the current year are as follows:Interest on Madison County school bonds $600Interest on U. S.
Answers (1)
The 2016 financial statements of CVS Health Corporation reported the following information (in millions) : 2016 2015 Net sales $177,526 $153,290 Cost of sales 148,669 126,762 Inventories, net 14,760 14,001 The inventory turnover ratio for 2016 is:
Answers (1)
When manufactured goods are used to produce other goods and services, they are called capital goods. True or False
Answers (1)
Q 8.2: On June 15th, Buehler Company sells merchandise on account to Chaz Co. for $1,000, terms 2/10, n/30. On June 20th, Chaz Co. returns merchandise worth $300 to Buehler Company. On June 24th, payment is received from Chaz Co. for the balance due.
Answers (1)
For the year, B&K United increased current liabilities by $1,400, decreased cash by $1,200, increased net fixed assets by $340, increased accounts receivable by $200, and decreased inventory by $150. What is the annual change in net working capital
Answers (1)
Home » Business » You short sold 1,100 shares of stock at a price of $29 and an initial margin of 55 percent. If the maintenance margin is 40 percent, at what share price will you receive a margin call? What is your account equity at this stock price?
Sign Up Forgot Password?