You sell short 150 shares of City Bank and Co that are currently selling at $55...

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
		49.67741935
		60.89285714
		213.125
		142.0833333

Solutions

Expert Solution

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

jeff jeffy answered 2 years ago

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