Explanation:
The initial margin required is 140%, which is calculated as: Initial margin = 1.4 × 1,000 × $45 = $63,000. This means that initially, in addition to the $45,000 obtained from the selling of the shares, the trader is required to contribute another $18,000 (= $63,000 − $45,000) to meet the initial margin requirement.
Q.4882 1,000 shares are sold by a trader at a price of $45 per share. The initial margin and maintenance margin are 140% and 115%. What is the initial margin required?
A
$63,000
B
$51,750
C
$45,000
D
$18,000
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