Question: You just opened an account to short sell 500 shares of JNJ, at $92 per share. You brokers initial margin requirement is 40%, and the

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?

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No i will not receive a margin call as the maintenace margin is 20 209... View full answer

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