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You short sold 400 shares of a stock at $51 a share. The initial margin is...

You short sold 400 shares of a stock at $51 a share. The initial margin is 50% and the maintenance margin is 25%. What is the amount of your liability for this transaction as initially shown on your account balance sheet? Select one:

a. $7,650

b. $5,100

c. $15,300

d. $10,200

e. $20,400

The answer is d or e? what does it mean initial transaction? The first transaction that is shown on the Liability and Equity?

Solutions

Expert Solution

Initial Transaction is when the transaction has been done and price of stock is $51

Liability in short sale = Value of Position - Margin put

Liability = 400(51) - 0.50(400)(51)

Liability = $10,200

jeff jeffy answered 2 years ago
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