question archive On the financial market, you decide to short sell 200 shares at the current price of 25 per share
On the financial market, you decide to short sell 200 shares at the current price of 25 per share
Subject:FinancePrice: Bought3
On the financial market, you decide to short sell 200 shares at the current price of 25 per share. The initial margin is 30% and the maintenance margin is 20%. The dividend is equal to 0.5 per share and the interest rate on the loan is 2 %(Chapter 3) a) Explain the short sale and how it's different from the buying on margin? (1 Mark) b) How much in cash or securities you must put into your brokerage account? (1 Mark) c) If the price increases to 26 will the investor receive a margin call? (1 Mark) d) How high can the price of the stock go before you get a margin call (2 Marks)
