Assume that you sell short 500 shares of BOK stock for Rs. 200 per share. Your short margin account requires you to maintain 60 percent initial…
BBS Fundamentals of Investment · 2079 · Solved Question with Answer
Assume that you sell short 500 shares of BOK stock for Rs. 200 per share. Your short margin account requires you to maintain 60 percent initial margin and 30 percent maintenance margin.
a. What is the initial value of debt and equity in your short margin account?
b. If stock price increase to Rs. 250 per share, what will be the value of equity, debt and actual margin in your short margin account?
c. Do you receive a margin call if stock price increases to Rs. 250? Explain.