The stock of PQR Industries is trading at $28.69. You feel the stock price will decline, so you short 219 shares at an initial margin of 61 percent. If the maintenance margin is 35 percent, at what share price (in $) will you receive a margin call?

The stock of PQR Industries is trading at $28.69. You feel the stock price will decline, so you short 219 shares at an initial margin of 61 percent. If the maintenance margin is 35 percent, at what share price (in $) will you receive a margin call?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 27P

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Concept explainers

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.

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The stock of PQR Industries is trading at $28.69. You feel the stock price will decline, so you short
219 shares at an initial margin of 61 percent. If the maintenance margin is 35 percent, at what
share price (in $) will you receive a margin call?

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