In many markets, all the proceeds from a short sale are deposited as collateral with the lender (i.e., the initial margin is essentially 100%). If the collateral value is then reduced to 50% of the value of the stocks that the short seller owes to the lender, the lender would require the short seller to restore the collateral value to 100%. You are a short seller in such a market. Initially, you shorted 2,000 shares of the stock at $5.55 per share. At what stock price will the lender ask you to restore the collateral value to 100%? $8.33 b. $11.10 c. $7.40 d. Not enough information to answer that question
In many markets, all the proceeds from a short sale are deposited as collateral with the lender (i.e., the initial margin is essentially 100%). If the collateral value is then reduced to 50% of the value of the stocks that the short seller owes to the lender, the lender would require the short seller to restore the collateral value to 100%. You are a short seller in such a market. Initially, you shorted 2,000 shares of the stock at $5.55 per share. At what stock price will the lender ask you to restore the collateral value to 100%? $8.33 b. $11.10 c. $7.40 d. Not enough information to answer that question
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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In many markets, all the proceeds from a short sale are deposited as collateral with the lender (i.e., the initial margin is essentially 100%). If the collateral value is then reduced to 50% of the value of the stocks that the short seller owes to the lender, the lender would require the short seller to restore the collateral value to 100%. You are a short seller in such a market. Initially, you shorted 2,000 shares of the stock at $5.55 per share. At what stock price will the lender ask you to restore the collateral value to 100%?
$8.33
b.
$11.10
c.
$7.40
d.
Not enough information to answer that question
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