An investor short sells 400 shares of a stock for $ 20.62 per share. The initial...
An investor short sells 400 shares of a stock for $ 20.62 per share. The initial margin is 50 %, and the maintenance margin is 29 %. The price of the stock rises to $ 29.95 per share. What is the margin, and will there be a margin call?
The margin in the account is _______________%. (Round to the nearest percent.)
Homework Answers
Initial margin = 400*20.62*50% =$4124
Loss =(20.62-29.95)*400 =$3732
Balance in margin account =$392
I.e. 392/400*20.62 = 4.75%
I.e. 5%
Yes there will be margin call since margin has fallen below maintenance margin level
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