What is the actual margin in percent at a share price

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Suppose that an investor sells short 300 shares of Q Corporation stock at $41 a share. The initial margin requirement is 50 percent, the maintenance margin is 35 percent, and brokerage costs are $10 per transaction.

a. Show the "T" account immediately after the investor takes the position. Show the calculations for the numbers in the "T" account.

(calcs)

b.If the price of the shares of firm Q fall to $37 after 1 month, show the "T" account at that point.

c. What is the actual margin in percent at a share price of $37?

d. At what price would the investor receive a margin call?

e. If the investor unwinds the short sale at year end by repurchasing firm Q shares at $36 per share and the shares paid a $2.00 dividend during the year, what was the investor's rate of return on the short sale?

Reference no: EM132466531

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