1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Elenna [48]
3 years ago
6

You are bearish on Telecom and decide to sell short 100 shares at the current market price of $30 per share. a. How much in cash

or securities must you put into your brokerage account if the broker’s initial margin requirement is 50% of the value of the short position? b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position? (Round your answer to 2 decimal places.)
Business
1 answer:
Natalka [10]3 years ago
7 0

Answer:

initial margin = $1500

margin call will be issued when the stock price reaches at  $34.62

Explanation:

given data

sell = 100 shares

market price =  $30 per share

to find out

How much in cash put  brokerage account and How high price of stock go before get margin call

solution

we know here value of investment that is

value of investment = shares × market price

value of investment = 100 × 30

value of investment = $3000

and Initial Margin is = value of investment × margin requirement

Initial Margin is = 3000 × 50%

initial margin = $1500

and

Total Assets is = value of investment  + initial margin

Total Assets is = $3000  + $1500

Total Assets is = $4500

so

total liability = share × Share Price

total liability = 100 P

here P is Share Price

so

Net Worth = Total Assets - Total Liabilities

Net Worth = 4500 - 100 P

and

Maintenance Margin =  \frac{Net worth}{Total Liabilities
}

30 % =  \frac{4500 - 100 P}{100 P
}

0.30 × 100 P = 4,500 - 100 P  

P = 34.62

so margin call will be issued when the stock price reaches at  $34.62

You might be interested in
Can someone help me and help me match these words to the correct picture
RUDIKE [14]
The telephone box and the other two about calls go to the bottom picture and the rest the top i would say
3 0
2 years ago
Compass Inc. purchased 1250 bags of insulation, on account, from Glassco Inc. The bags of insulation cost $5.50 each. Compass pa
Alina [70]

<u>Solution and Explanation:</u>

<u>Journal entry to record the purchase the bags of insultaion.</u>

Date            Particulars                                  Debit                       Credit

                 Inventory                                       $6875

                 accounts payable                                                        $6875

(Purchased insulated bags from Glassco Inc., 1250bags at the rate $5.5 each)

<u>entry to record the payment for shipping</u>

                Inventory                                          $320

                   cash                                                                           $320

( paid shipping charges for bags to warehouse)

<u>entry for return of the defective bags</u>

              accounts payable                                 $275

                   Inventory                                                                       $275

( returned defective bags to glassco Inc)

<u>To record the payment for the bags kept by compass.</u>

          Accounts payable                                        $6600

            cash                                                                                           $6600

( payment for remaining bags to Glassco Inc., )

4 0
3 years ago
Concord Corporation reported net income of $177,200 for 2017. Concord Corporation also reported depreciation expense of $35,230
klio [65]

Answer

Net income 177,200

+35230 depreciation

+4,920 loss on disposal

217,350 adjusted net income (a)

↑↓

↑AR -14,160

↑Prepaid -4,190

↑AP 17,220

Change in working Capital -1,130(b)

<u />

<u>Cash Flow generated from operating activities 216,220</u>

<u />

Explanation:

(a) we must remove the non-monetary account from the income statement

This means add the non-monetary expenses and losses

Subtract the non monetary revenue and gains

(b)

The increase in assets account have a negative meaning, because it is assumed the company used cash to adquire it.

Whiel increase in liabilities are positive, because the company receive aah or delay the payment of cash.

4 0
3 years ago
__________ represents a proactive approach to satisfying customer needs that is based on gathering data about our customers to l
Georgia [21]
Customer driven quality
4 0
3 years ago
If investors speculate in derivative contracts rather than the underlying asset, they will probably achieve ________ returns, an
Ede4ka [16]

Answer:

Explanation: do your best and i hope you do good

8 0
2 years ago
Other questions:
  • Which statement below best captures the overall point and focus of the New York Times article, Document 3?
    10·1 answer
  • Resources include: Personnel, Supplies, Equipment, and _______________. Select the missing item from below:
    9·1 answer
  • LO 7.1Which of the following is true in a bottom-up budgeting approach?
    10·1 answer
  • Daybook Inc. budgeted production of 403,500 personal journals in 20Y6. Paper is required to produce a journal. Assume six square
    5·1 answer
  • On January 3, 2013, Roberts Company purchased 30% of the 100,000 shares of common stock of Thomas Corporation, paying $1,500,000
    5·1 answer
  • Why is it important to write a zero-based budget every month?
    13·1 answer
  • Can I use MemberPress to create and sell online courses?
    6·2 answers
  • Why were trade unions established​
    8·2 answers
  • A market that has no barriers to entry and many small firms selling products that are slightly different from one another is bes
    9·1 answer
  • lisa lives next to a vacant plot that belongs to carol. carol has never visited the plot in the last 20 years during which perio
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!