Question

You are very optimistic about the personal computer industry, so you buy 200 shares of Microtech Inc. at $45 per share. You are very pessimistic about the machine tool industry, so you sell short 300 shares of King Tools Corporation at $55. Each transaction requires a 40 percent margin balance.
a. What is the initial equity in your account?
b. Assume the price of each stock is as follows for the next three months (month-end).
Compute the equity balance in your account for each month:


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  • CreatedSeptember 21, 2015
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