Question

An investor short sells 200 shares of a stock for ​$19 per share. The initial margin is 53​%. How much equity will be initially required in the account to complete this​ transaction? In other​ words, what is the initial margin​ deposit?

Answer 1

Answer:

$2,014

Explanation:

Given:

Number of shares sold = 200 shares

Price per share = $19

Initial margin = 53%

Now,

the total value of the equity = Number of shares × Price per share

or

the total value of the equity = 200 × $19 = $3,800

Therefore,

The initially required equity = value of the equity × Initial margin

or

The initially required equity = $3,800 × 53% = $2,014