Question: You and your friend both use the same broker that requires an initial margin of 50% and a maintenance margin of 30% when short selling
You and your friend both use the same broker that requires an initial margin of 50% and a maintenance margin of 30% when short selling or buying on the margin. Both of you have $1,500 of equity in your accounts. The price of stock A is currently $30/share. You buy on margin 100 shares of stock A and your friend short sells 100 shares of stock A. a) The stock price increases by 10%. What is your return? What is your friends return? b) At what price do you get a margin call? c)At what price does your friend get a margin call?
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