You sell short 100 shares of Hi-Light Corporation when it is trading at $70.Your margin requirement is 50%.Assuming there was no commission and the maintenance margin is 25%,at what stock price would you receive a margin call?
A) $76
B) $80
C) $84
D) $88
E) $92

Question

Quizplus · Accepted Answer

(your equity)/(value of stock owned)= 0.25
[(100)($70)+ (0.50)(100)($70)- 100P]/100P = 0.25
[$7,000 + $3,500 - 100P]/100P = 0.25
$10,500 - 100P = 25P
$10,500 = 125P
P = $84

You Sell Short 100 Shares of Hi-Light Corporation When It