Question

Item4 2.5 points eBookPrintReferences Check my work Check My Work button is now enabledItem 4Item 4 2.5 points You are bearish on Telecom and decide to sell short 300 shares at the current market price of $125 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

Answer 1

$18,750

Step-by-step explanation:

The computation of cash or securities is shown below:-

Initial margin or cash or securities to be put into brokerage = Number of shares × current market price per share × Initial margin

= 300 × 125 × 50%

= $18,750

Therefor for computing the initial margin or cash or securities to be put into brokerage we simply applied the above formula.