The price of a share of A stock is $60.90 and you sells short 5,000 shares. The broker’s initial margin requirement is 50% and you deposits additional cash into your brokerage account to meet that margin.
How much additional cash must you deposit in your brokerage account? What is your initial balance sheet?
If the price A stock rises to $65 per share, what is the margin on the account? What is your balance sheet?
The broker’s maintenance margin is 35%. What is the lowest price of A stock that will induce a margin call?