Suppose that you just short sold 100 shares of Quiet Minds stock for $97.00 per share....
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Suppose that you just short sold 100 shares of Quiet Minds stock for $97.00 per share. Required: a. If the initial margin requirement is 75%, how much equity must you invest? (Round your answer to the nearest dollar) Equity b. Construct the balance sheet that corresponds to the transaction described in requirement a. Stock T-bills Total assets Margin percentage Assets Liabilities and Equity c. Now suppose the price of the stock falls to $89 per share. What is your current margin percentage? (Round your answer to 2 decimal places.) Stock price Short position (100 shares) Equity Total liabilities and equity d. The maintenance margin is 50%. At what stock price would you get a margin call? (Round your answer to 2 decimal places.) Suppose that you just short sold 100 shares of Quiet Minds stock for $97.00 per share. Required: a. If the initial margin requirement is 75%, how much equity must you invest? (Round your answer to the nearest dollar) Equity b. Construct the balance sheet that corresponds to the transaction described in requirement a. Stock T-bills Total assets Margin percentage Assets Liabilities and Equity c. Now suppose the price of the stock falls to $89 per share. What is your current margin percentage? (Round your answer to 2 decimal places.) Stock price Short position (100 shares) Equity Total liabilities and equity d. The maintenance margin is 50%. At what stock price would you get a margin call? (Round your answer to 2 decimal places.)
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a To calculate the equity required you need to determine the initial margin amount based on the initial margin requirement The initial margin requirem... View the full answer
Related Book For
Introduction To Derivatives And Risk Management
ISBN: 9781305104969
10th Edition
Authors: Don M. Chance, Robert Brooks
Posted Date:
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