On Jan 1, you sold short 400 shares of AT&T at $35 per share. You post...

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Finance

On Jan 1, you sold short 400 shares of AT&T at $35 pershare. You post $7000 to the margin account. On April 1, youreceived a margin call on this trade. Assume the minimum marginrequirement is 40%, what is the price of the stock that triggeredthe margin call?
$29.17
$37.5
$39.25
$43.75
None of the above
You are an investment advisor for Alan and Jimmy. You've helpedthem optimally allocate their investment portfolios along the samecapital allocation line (CAL). If Alan's portfolio has a higherweight on risk-free asset than Jimmy's portfolio, then which of thefollowing statements MUST be true:

[I]Â Â Â Alanâ€™s portfolio has lower expected returnsthan Jimmyâ€™s
[II]Â Â Alan is less risk-averse than Jimmy
[III] Alan must hold a positive position in the risky asset
I only
I and II
I and III
II and III
I, II, and III
On January 1, you sold short 200 shares of Walt Disney Co at$150 per share and pledged 50% initial margin. On March 1, adividend of $10 per share was paid. On June 1, you closed yourposition buying 200 shares at $170 per share. What is your rate ofreturn?
-30%.
-35%.
-40%.
-70%
None of the above

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4.3 Ratings (770 Votes)

1 Particulars Amount Margin amount 7000 Margin requirement 40 Total amount can be traded 17500 No of Shares 400 Average price at which margin call required See Answer

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