You short sold 500 shares of stock at a price of $68 and an initial...
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You short sold 500 shares of stock at a price of $68 and an initial margin of 60 percent. If the maintenance margin is 30 percent, at what share price will you receive a margin call? What is your account equity at this stock price? FIN 424 FORMULA SHEET EXAM 1 1+ EAR=(1+ HoldingPeriodPercentage Return)" VAR(R) o SD(R)= aVAR(R) Geometric return [[(1+R1)*(1+R2)*(1+R3)*....*(1+RN)]^(1/N)]-1 Long: Margin= 1 Short: Margin= ER-RY N-1 Long: P= Account Equity Value of Stock Account Equity ShortPosition Amount Borrowed / Number ofShares 1-Maintenance argin Short: p InitialM arginDeposit + Short Proceeds)/ Number of Shares 1+ MaintenanceMargin Blume's Formula: R(T)- - Geometric average + NX Arithmetic average -X
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