Please help with this problem. You are bearish on Telecom and decide to sell sho
ID: 2664475 • Letter: P
Question
Please help with this problem.You are bearish on Telecom and decide to sell short 210 shares at the current market price of $80 per share.
a.
How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? (Omit the "$" sign in your response.)
Cash or securities to be put into brokerage account $
b.
How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Margin call will be made at price $ or higher
Explanation / Answer
210 x 80 =16800, 50%=8400 8400/x=30% x=8400/.30 = 28000 28000/210= 133.33 dollars per share