Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. you short 25,000 shares of facespace, inc. at $320

You short 25,000 shares of FaceSpace, Inc. at $320 /share. The initial margin requirement is...

60.1K

Verified Solution

Question

Accounting

image

You short 25,000 shares of FaceSpace, Inc. at $320 /share. The initial margin requirement is 50% and the maintenace margin is 35%. (i) At what price per share will you get a margin call? How much money would you have lost if the stock did hit that price? ( 10 points) (ii) Now assume the price of FaceSpace shares fall to $300 and you decide to "press you bet" by shorting more shares. You feel comfortable increasing the amount of your equity margin back up to the dollar amount of your original position when the stock was priced at $320 / share. Assuming the initial margin percentage remains at 50%, how many additional shares could you short? (10 points) (iii) Assume FaceSpace is now trading at $128/ share and you decide to close our your entire short position, including the additional shares you shorted n part (ii) above. How much money (in dollars) would you have made or lost on this position assuming you ignore all other fees? (6 points)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students