You just opened an account to short sell 500 shares of JNJ, at $92 per share. You
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Question:
You just opened an account to short sell 500 shares of JNJ, at $92 per share. You broker’s initial margin requirement is 40%, and the maintenance margin requirement is 20%.
a)If the stock price goes down to $80, will you receive a margin call?
b)If the price rises to $108, will you receive a margin call?
c)Assume you buy stocks back at $108 to cover your position, what is the rate of return on the investment?
Related Book For
Statistics for Business and Economics
ISBN: 978-0132930192
8th edition
Authors: Paul Newbold, William Carlson, Betty Thorne
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