The stock of Flop Industries is trading at $29. You feel the stock price will de

Question

The stock of Flop Industries is trading at $29. You feel the stock price will decline, so you short 1,300 shares at an initial margin of 50 percent. If the maintenance margin is 35 percent, at what share price will you receive a margin call? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)

The stock of Flop Industries is trading at $29. You feel the stock price will decline, so you short 1,300 shares at an initial margin of 50 percent. If the maintenance margin is 35 percent, at what share price will you receive a margin call? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Explanation / Answer

at that price the margins are as follows:

Initial margin= 50%

= $29X1300 X0.5= $18,850

Maintanance margin= 30%

= $29X1300X0.3=$11, 310

if the margin is less than $7,540 then he will cal to pay again.

(i.e. 18,850 - 11310= 7450)

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