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You sell 100 shares of Norton Corporation short. The price of the stock is $60 per share. The margin requirement is 50 percent.

a. How much is your initial margin?

b. If stock goes down to $42, what is your percentage gain or loss on the initial margin (equity)?

c. If stock goes up to $67.50, what is your percentage gain or loss on the initial margin (equity)?

d. In part c, if the minimum margin standard is 30 percent, will you be required to put up more margin? (Do the additional necessary calculations to answer this problem.)

Basic Finance, Finance

  • Category:- Basic Finance
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