In: Finance
You sell short 150 shares of City Bank and Co that are currently selling at $55 per share. You post the 0.55 margin required on the short sale. If your broker requires a 0.4 maintenance margin, at what stock price will you get a margin call? (You earn no interest on the funds in your margin account, and the firm does not pay any dividends.)
39.28571429 |
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49.67741935 |
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60.89285714 |
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213.125 |
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142.0833333 |
The proceeds of the sale = 150*$55 = $8250
Margin posted = 0.55*8250 = $4537.5
Maintenance margin = 0.4
Total Account value = $8250+$4537.5 =$12,787.5
Margin call value =
=$9133.92857
Price per share =
= $60.89285714