The Stock of Clapton Industries Is Selling at a Price

question 60

Multiple Choice

The stock of Clapton Industries is selling at a price of $96 per share. You short 600 shares at an initial margin of 50 percent. If the maintenance margin is 30 percent, at what price will you receive a margin call?

• A) $111.96
• B) $116.19
• C) $114.32
• D) $110.77
• E) $115.09

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Definitions:

Prepaid Insurance

Insurance premiums paid in advance by a company, recorded as an asset on the balance sheet until the coverage period comes into effect.

Depreciation Expense

The allocated portion of the cost of a company's fixed assets that is written off each year, reflecting the asset's usage and wear and tear.

Insurance Premium

The amount paid periodically to an insurance company by policyholders for covering their risk.

Income Statement

The income statement is a financial document that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income.