You are bearish on BCE stock and decide to sell short 100 shares at the current market
Question:
You are bearish on BCE stock and decide to sell short 100 shares at the current market price of $ 50 per share.
a. How much in cash or securities must you put into your brokerage account if the broker’s initial margin requirement is 50 percent of the value of the short position?
b. How high can the price of the stock go before you get a margin call if the minimum margin is 30 percent of the value of the short position?
Step by Step Answer:
a Initial margin is 50 of 5000 o...View the full answer
Investments
ISBN: 978-0071338875
8th Canadian Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus, Stylianos Perrakis, Peter
Related Video
Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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