Stan sold short 100 shares at $40 per share. The initial margin requirement is 70%,...

60.1K

Verified Solution

Question

Finance

image
Stan sold short 100 shares at $40 per share. The initial margin requirement is 70%, and the maintenance margin is 40%. (8) a. How would Stan's account look if the stock price decreased to $10? Use a balance sheet account to summarize the status of Stan's account and calculate Stan's HPR. (2) b. What is the price that Stan could earn the maximum HPR? (2) Compute the maximum HPR using the price in (b)? (2) d. What is the lowest price that would trigger a margin call? (2)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students