Now assume that that you short 4500 shares of AT&T (T) at $25 per share. Your...

Now assume that that you short 4500 shares of AT&T (T) at $25 per share. Your broker has a 40% initial margin. How does this look in the balance sheet?

ii. Your broker has a maintenance margin of 30%. If the price of the stock falls to $20 per share, what is your new margin? Are you benefited or affected by the price decrease?

iii. How do you represent it in the balance sheet?

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Suppose you short-sell 100 shares of IBM, now selling at $200 per share.

Suppose you short-sell 100 shares of IBM, now selling at $200 per share. a. What is your maximum possible loss? b. What happens to the maximum loss if you simultaneously place a stop-buy order at $210? 2. Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams at $40. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $40 to $50,...

Suppose you short-sell 100 shares of IBM, now selling at $178 per share. a. What is...

Suppose you short-sell 100 shares of IBM, now selling at $178 per share. a. What is your maximum possible loss? Maximum possible loss are (Click to select)178unlimited0 b. What happens to the maximum loss if you simultaneously place a stop-buy order at $192.50? (Do not round intermediate calculations. Input the amount as a positive value.) Maximum loss $

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...

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

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...

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 short-sell 400 shares of Rock Creek Fly Fishing Co., now selling for $52 per share....

You short-sell 400 shares of Rock Creek Fly Fishing Co., now selling for $52 per share. If you want to limit your loss to $2,400, you should place a stop-buy order at ________.

You sell short 1,000 shares in Omega Corporation at $20 per share and give your broker...

You sell short 1,000 shares in Omega Corporation at $20 per share and give your broker $12,000 to establish a margin account. a.) What is the margin (%) in the account at the time of sale? b.) If the maintenance margin is 25%, how high will the price of Omega stock have to rise for you to receive a margin call?

You sell short 200 shares of FNH at $25/share. The initial margin is 60% and maintenance...

You sell short 200 shares of FNH at $25/share. The initial margin is 60% and maintenance margin 30%. If you sell all shares at $21, and receive $1.50/share dividend: a. What is your percent return? b. At what price would you receive a margin call?

Assume you purchase 200 shares of Apple at $350 per share, but you are worried that...

Assume you purchase 200 shares of Apple at $350 per share, but you are worried that it may fall in price, so you wish to hedge part of your position by writing a 100 share option. The option has a strike price of $300 and a premium of $50. If at that the time of expiration, the stock is selling at the following prices ($200, $300, $400) what will be your overall gain or loss? What about the person who...

Subjects