Question

In: Finance

1. Assume you sold short 100 shares of common stock at $50 per share. The initial...

1. Assume you sold short 100 shares of common stock at $50 per share. The initial margin is 60%. What would be the maintenance margin if a margin call is made at a stock price of $60?
2. Assume you sell short 100 shares of common stock at $45 per share, with initial margin at 50%. What would be your rate of return if you repurchase the stock at $40/share? The stock paid no dividends during the period, and you did not remove any money from the account before making the offsetting transaction.

Please show work!

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Assume you sold short 100 shares of common stock at $70 per share. The initial margin...
Assume you sold short 100 shares of common stock at $70 per share. The initial margin is 30%. What would be the maintenance margin if a margin call is made at a stock price of $85?             A) 40.5%             B)   20.5%             C)   35.5%             D) 23.5%             E)   none of the above     53.   You sold short 100 shares of common stock at $45 per share. The initial margin is 30%. At what stock price would you receive...
1) Assume you buy 100 shares of stock at $40 per share on margin. The initial...
1) Assume you buy 100 shares of stock at $40 per share on margin. The initial margin is 50%. If the price rises to $55 per share, what is your percentage gain on the initial equity?
Assume you sell short 100 shares of Shell Corp. at $100 per share, with initial margin...
Assume you sell short 100 shares of Shell Corp. at $100 per share, with initial margin at 45%. The minimum margin requirement is 30%. The stock will pay no dividends during the period, and you will not remove any money from the account before making the offsetting transaction. At what price would you face a margin call? If the price is $110 at the end of the period, what is your margin ratio at that point?
You purchased 100 shares of common stock on margin for $150 per share. The initial margin...
You purchased 100 shares of common stock on margin for $150 per share. The initial margin requirement is 65%, the maintenance margin requirement is 40%. Find your rate of return in % if you sell the stock at $180 per share exactly 1 year later if interest rate on margin loan is 10%
You purchased 100 shares of IBM common stock on margin at $151 per share. Assume the...
You purchased 100 shares of IBM common stock on margin at $151 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin. Round your answer to the nearest cent (2 decimal places).
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?
On January 1, you sold short 100 shares of XYZ stock at $20 using a 50%...
On January 1, you sold short 100 shares of XYZ stock at $20 using a 50% initial margin. The interest rate on the margin account is 10% annually. On April 1 (in three-months), you covered the short sales by buying stock at a price of $15 per share. You paid 50 cents per share in commissions for each transaction. Assume you received interest on all your assets, i.e. the sum of the short sale proceeds and the margin. 1. What...
On January 1, you sold short 100 shares of XYZ stock at $20 using a 50%...
On January 1, you sold short 100 shares of XYZ stock at $20 using a 50% initial margin. The interest rate on the margin account is 10% annually. On April 1 (in three-months), you covered the short sales by buying stock at a price of $15 per share. You paid 50 cents per share in commissions for each transaction. Assume you received interest on all your assets, i.e. the sum of the short sale proceeds and the margin. 1. What...
On January 1, you sold short 100 shares of XYZ stock at $20 using a 50%...
On January 1, you sold short 100 shares of XYZ stock at $20 using a 50% initial margin. The interest rate on the margin account is 10% annually. On April 1 (in three-months), you covered the short sales by buying stock at a price of $15 per share. You paid 50 cents per share in commissions for each transaction. Assume you received interest on all your assets, i.e. the sum of the short sale proceeds and the margin. 1. What...
Assume you sell short 1,000 shares of common stock at $35 per share. What would be...
Assume you sell short 1,000 shares of common stock at $35 per share. What would be your profit if you repurchase the stock at $25 per share? The stock paid no dividends during the period. A. $10,000 B. -$5,600 C. $5,600 D. -$10,000. E. $12,600
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT