Suppose you short sell 100 shares of Twitter priced at $50 a share. The initial margin is 50% and the maintenance margin is 30%. a. Show the initial balance sheet view of your position, including assets, liabilities, & owners’ equity. b. At what price of the stock will your return be 45%?

Suppose you short sell 100 shares of Twitter priced at $50 a share. The initial margin is 50% and the maintenance margin is 30%. a. Show the initial balance sheet view of your position, including assets, liabilities, & owners’ equity. b. At what price of the stock will your return be 45%?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 9MC

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Question

Suppose you short sell 100 shares of Twitter priced at $50 a share. The initial margin is 50% and the maintenance margin is 30%.

a. Show the initial balance sheet view of your position, including assets, liabilities, & owners’ equity.

b. At what price of the stock will your return be 45%?

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