At the beginning of the trading day you short sold 500, Ask an Expert

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At the beginning of the trading day, you short sold 500 shares of stock for $36 a share. The initial margin requirement is 60 percent. You are also given that the maintenance margin is 40 percent. At the end of the day, the closing price of stock is $42 a share. Will you receive a margin call? Why? Suppose that you took care of this margin call by depositing additional amount, then what is the margin call deposit amount in dollars? Prepare the balance sheet of your account after you have taken care of the margin call to verify that your margin balnce is equal to the maintenance margin.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92800131

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