Equity Markets and Portfolio Theory

1.An investor short sells 200 shares of a stock for $23 per share. The initial margin is 47%. How much equity will be required in the account to complete this transaction?

2. Assume that an investor buys 100 shares of stock at $ 46 per share, putting up a 61% margin.

a. What is the debit balance in this transaction?

b. How much equity capital must the investor provide to make this margin transaction?

3. Assume that an investor buys 50 shares of stock at $ 48 per share, putting up a 73% margin.

a. What is the debit balance in this transaction?

b. How much equity funds must the investor provide to make this margin transaction?

c. If the stock rises to $ 65 per share, what is the investor’s new margin position?

4. Jerri Kingston bought 100 shares of stock at $85.69 per share, using an initial margin of 68%. Given a maintenance margin of 25%, how far does the stock have to drop before Jerri faces a margin call? (Assume that there are no other securities in the margin account.)