What is the primary motive for short selling? Describe the basic short-sale procedure. Why must the short seller make an initial equity deposit?
Answer to relevant QuestionsWhat relevance do margin requirements have in the short-selling process? What would have to happen to experience a margin call on a short-sale transaction? What two actions could be used to remedy such a call? What are the third and fourth markets? Critics of longer trading hours believe that expanded trading sessions turn the stock market into a casino and place the emphasis more on short-term gains than on long-term investment. Do you agree? Why or why not? Is it ...An investor short sells 100 shares of a stock for $20 per share. The initial margin is 50%. Ignoring transaction costs, how much will be in the investor's account after this transaction if this is the only transaction the ...Assume that an investor buys 50 shares of stock at $45 per share, putting up a 70% margin. a. What is the debit balance in this transaction? b. How much equity funds must the investor provide to make this margin ...
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