Assume that you just short sold 300 shares of Spencer stock at $120 per share. The...

Question

Question

business finance

Answer 1

Answer #1

Solution :-

Here the Stock that short = 300 shares of $120 each = $36000

Initial Margin = 50%

Therefore Amount Deposited = $36000 * 50% = $18000

Maintenance Margin = 30% = $36000 * 30% = $10800

Means we need to invest more money if our net balance goes below $10800

Which means after a loss of $7200 ( $18000 - $10800)

means $7200 / 300 = loss of $24 per share

The Price that would trigger a margin call = $120 + $24 = $144

Answer 2

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