Please provide an excel file that can answer questions similiar to this one by chaning the...

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Finance

Please provide an excel file that can answer questionssimiliar to this one by chaning the data and inputing newdata
1.You sell short 100 shares of theGTY stock at $80 per share. Assume your broker requires an initialmargin of 40% and a maintenance margin of 25%.
1)If the stock price drops to $70,what is the percentage margin?
Initial total stock value:$80(100)=$8,000
If the stock price drops to $70,
Total stock value: $70(100)=$7,000
Required margin deposit when the shortposition was entered into: $8,000(.40)=$3,200.
Percentage margin =
2)If the stock price increases above acertain level, P, the percentage margin would drop belowthe maintenance margin of 25% and you will get a margin call. Whatis P?
Percentage margin =
3)If the stock price increases to $95,how much money do you have to add to your account to restore themaintenance margin of 25%?
Let this amount to be X.
Percentage margin =
X=675
The TSM Corporation’s stocks are currently selling at $45 pershare. You believe that the stock is overvalued and decide to takea short position on the stock. You short 100 shares for a total of$4,500. Your broker borrow this number of shares from his clients,sell them, and deposit $4,500 in your account. You cannot withdrawit. In addition, you must post a margin as collateral. Assume yourbroker requires an initial margin of 60% and a maintenance marginof 40%.
Percentage margin:
The equity value in account is equal to cash received from theshort sale, plus the required margin deposit, minus the value ofthe stock owed. The initial margin requirement is 60%, so theinitial required margin deposit is $4,500(.60)=$2,700. Initiallythe value of the stock owed is also $4,500.
So initially, the percentage margin is equal to
If the stock price drops to $40,
Percentage margin =
If the stock price increases to $50,
Percentage margin =
If the price increases above a certain level, P, thepercentage margin would drop below the maintenance margin of 40%and you will get a margin call. What is P?
Percentage margin =
If the stock price increases to $60, how much money do you haveto add to your account to restore the maintenance margin of40%?
Let this amount to be X.
Percentage margin =
X=1,200

Answer & Explanation Solved by verified expert

4.2 Ratings (501 Votes)

1 Calculation of percentage margin a Margin deposit when short position entered 800040 3200 New margin when stock price has come down 700040 2800 Percentage margin 320028003200 1250 This 1250 is also profit margin New margin required is 2800 ie 40 of 7000 2 Assuming that See Answer

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Please provide an excel file that can answer questionssimiliar to this one by chaning the data and inputing newdata1.You sell short 100 shares of theGTY stock at $80 per share. Assume your broker requires an initialmargin of 40% and a maintenance margin of 25%.1)If the stock price drops to $70,what is the percentage margin?Initial total stock value:$80(100)=$8,000If the stock price drops to $70,Total stock value: $70(100)=$7,000Required margin deposit when the shortposition was entered into: $8,000(.40)=$3,200.Percentage margin =2)If the stock price increases above acertain level, P, the percentage margin would drop belowthe maintenance margin of 25% and you will get a margin call. Whatis P?Percentage margin =3)If the stock price increases to $95,how much money do you have to add to your account to restore themaintenance margin of 25%?Let this amount to be X.Percentage margin =X=675The TSM Corporation’s stocks are currently selling at $45 pershare. You believe that the stock is overvalued and decide to takea short position on the stock. You short 100 shares for a total of$4,500. Your broker borrow this number of shares from his clients,sell them, and deposit $4,500 in your account. You cannot withdrawit. In addition, you must post a margin as collateral. Assume yourbroker requires an initial margin of 60% and a maintenance marginof 40%.Percentage margin:The equity value in account is equal to cash received from theshort sale, plus the required margin deposit, minus the value ofthe stock owed. The initial margin requirement is 60%, so theinitial required margin deposit is $4,500(.60)=$2,700. Initiallythe value of the stock owed is also $4,500.So initially, the percentage margin is equal toIf the stock price drops to $40,Percentage margin =If the stock price increases to $50,Percentage margin =If the price increases above a certain level, P, thepercentage margin would drop below the maintenance margin of 40%and you will get a margin call. What is P?Percentage margin =If the stock price increases to $60, how much money do you haveto add to your account to restore the maintenance margin of40%?Let this amount to be X.Percentage margin =X=1,200