Assume an investor shorted 1,000 shares of Company Y at $16.00 using a 50% margin. Following a sharp rise in the stock to $19.20, the investor has received a maintenance margin call. At this point, the investor is required to wire sufficient funds to bring account equity back to 50%. This information summarized in the following table: Price Shares Initial Margin New Price $16.00 1,000 50% $19.20 How much in additional funds must be added to the account to bring account equity back to 50%? Additional funds in the amount of s must be added to the account. Round your answer to the nearest cent.
Assume an investor shorted 1,000 shares of Company Y at $16.00 using a 50% margin. Following a sharp rise in the stock to $19.20, the investor has received a maintenance margin call. At this point, the investor is required to wire sufficient funds to bring account equity back to 50%. This information summarized in the following table: Price Shares Initial Margin New Price $16.00 1,000 50% $19.20 How much in additional funds must be added to the account to bring account equity back to 50%? Additional funds in the amount of s must be added to the account. Round your answer to the nearest cent.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Assume an investor shorted 1,000 shares of Company Y at $16.00 using a 50% margin. Following a sharp rise in the stock to $19.20, the investor has
received a maintenance margin call. At this point, the investor is required to wire sufficient funds to bring account equity back to 50%. This information is
summarized in the following table:
Price
$16.00
Shares Initial Margin New Price
1,000
50%
$19.20
How much in additional funds must be added to the account to bring account equity back to 50%?
Additional funds in the amount of $
must be added to the account. Round your answer to the nearest cent.
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