Question #2 (a) Assume that you are planning to short sell 2,000 shares of Abyss Inc....
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Question #2 (a) Assume that you are planning to short sell 2,000 shares of Abyss Inc. The stock currently sells for $20 per share. The initial margin requirement is 57%. When you complete the trade, how much cash will you have to leave at your broker? (b) Assume that the stock falls to $15 per share. Prepare your balance sheet assuming this is the only holding in your margin account. (c) How high could the price of Abyss stock rise before you would receive a margin call if the maintenance margin requirement is 35%? Question #2 (a) Assume that you are planning to short sell 2,000 shares of Abyss Inc. The stock currently sells for $20 per share. The initial margin requirement is 57%. When you complete the trade, how much cash will you have to leave at your broker? (b) Assume that the stock falls to $15 per share. Prepare your balance sheet assuming this is the only holding in your margin account. (c) How high could the price of Abyss stock rise before you would receive a margin call if the maintenance margin requirement is 35%?
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a To calculate the amount of cash you need to leave at your broker for the short sale trade of 2000 ... View the full answer
Related Book For
Fundamentals Of Investing
ISBN: 9780135175217
14th Edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
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