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Answer: $84.00
**Correct answer: D — $84.00** Short sale value at initiation: - \(500 \times 70 = 35{,}000\) Initial margin account balance: - \(1.50 \times 35{,}000 = 52{,}500\) Margin call occurs when the account falls to the maintenance requirement, which is: - \(1.25 \times\) current market value of the shares short Let the stock price be \(P\). Then the current value of the short position is: - \(500P\) Set the account balance equal to the maintenance requirement: - \(52{,}500 = 1.25 \times 500P\) - \(52{,}500 = 625P\) - \(P = 84\) So further margin is required when the share price reaches **$84.00**.
Author: Manit Arora
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Question 21.10.2. A trader shorts 500 shares when the stock price is $70.00. The initial and maintenance margin, respectively, are 150.0% and 125.0%. At what share price will further margin be required?
A
$65.00
B
$72.00
C
$79.00
D
$84.00
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