Homework Answers
Solution:-
If an investor wants to short sell 100 shares of IBM at a price of $135 per share, it means the total transaction value is as follows:
Total transaction value= No. of shares*price per share
Total transaction value= 100*135 = $13,500
Cash required in margin account= Total transaction value*margin % requirement
Cash required in margin account= 13,500*50% = $6,750
Thus the investor would require $6,750 at the beginning of transaction as his own cash in the margin account and the correct option is option (b).
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