Question

In: Finance

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.

  1. At what price would you face a margin call?
  1. If the price is $110 at the end of the period, what is your margin ratio at that point?

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE


Related Solutions

assume you sell short 100 shares of common stock at 50 per share, with initial margin...
assume you sell short 100 shares of common stock at 50 per share, with initial margin at 50%, at what price you will receive a margin call from your broker ( assuming maintenance margin of 30%) answers- 42.26, 57.69, 62.00, 24.44 What is your rate of return in previous problem if you purchase the stock at $40 per share? answers- 40%, 60%, 25%, 18%
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...
You decide to sell short 50 shares of Ford at $10 per share. The initial margin...
You decide to sell short 50 shares of Ford at $10 per share. The initial margin requirement is 50%. The maintenance margin is 40%. (Please show the work/equations!!! Thanks!) 1) How much cash (X) must we put into the brokerage account? 2) How high can the stock price be before a margin call? 3) Suppose stock price immediately declines to P = $9. What is the rate of return for this investor? 4) Suppose stock price immediately rises to P...
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?
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 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?
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...
You sell short 200 shares at $50 per share. You post the 50% margin required for...
You sell short 200 shares at $50 per share. You post the 50% margin required for the short sale. Assume you earn no interest on your margin funds, nor pay any interest on the loan of shares. The company stock pays dividends of $0.33 per share every quarter. What is your rate of return on this position, if you close it out at $42 per share after one year? Enter answer in percents, accurate to 2 decimal places.
An investor shorts 100 shares of a stock at $52 per share with initial margin of...
An investor shorts 100 shares of a stock at $52 per share with initial margin of 50% and no interest. The maintenance margin is 30%. Suppose the closing prices for the stock over the next three days is $56, $60 and $58. What are the values for margin and equity in the investor’s account at the end of day three?
You purchased 1000 shares of Dell stock on margin at $70 per share. Assume the initial...
You purchased 1000 shares of Dell stock on margin at $70 per share. Assume the initial margin is 50% and the maintenance margin is 40%. Assume the stock pays no dividends, and ignore interest on the margin loan. a.What is the rate of return on his investment if the price rises to $85 per share? b.What is the margin if Stock price falls to $60 per share, will the investor receive a margin call ? c.How far can the stock...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT