Last week, you sold 800 shares of Ace stock for $24,000. The sale was a short sale with an initial margin requirement of 70 percent. The maintenance margin is 40 percent. Some positive news concerning the company was released last night and the stock price jumped this morning. You will get a margin call from your broker if the price exceeds $________ (rounded to the nearest cent).
Price range which require margin call:
= [(Initial margin+Short sale proceeds)/Number of shares]/(1+Maintenance margin)
= [($16,800+$24,000)/800]/(1+40%)
= $36.43
Hence, if stock price reaches $36.43, call will be made.
Last week, you sold 800 shares of Ace stock for $24,000. The sale was a short...