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15 March, 04:40

You sold short 200 shares of common stock at $60 per share. The initial margin is 60%. Your initial investment was

A) $4,800

B) $12,000

C) $5,600

D) 7200 or 7300

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Answers (1)
  1. 15 March, 08:38
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    D) 7200 or 7300

    Explanation:

    Initial Margin Rate = 60%

    No. of Shares sold = 200

    Price of Shares = $60

    Amount of Sale = 200 x $60 = $12,000

    Initial Investment = Amount of Sale x Initial Margin

    Initial Investment = $12,000 x 60%

    Initial Investment = $7,200

    So the correct option is D) 7200 or 7300 as Initial margin is the minimum amount as a security required to trade in the market. An investor required 60% of the deal to deposit as Initial margin.
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