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Initial margin requirement on short sales

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Reference no: EM131179273

Sam wants to short sell 300 shares of Wal-Mart (WMT), trading for $77 a share. There is a 50% initial margin requirement on short sales.

a. How can Sam sell shares he doesn't own? In other words, where do the shares come from?

b. What is Sam's profit if the price of Wal-Mart falls to $68? Show work or explain.

Reference no: EM131179273

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