Jennifer Believes That Northern Wine Stock Is Going to Decline

question 5

Multiple Choice

Jennifer believes that Northern Wine stock is going to decline in value so she is short selling 800 shares at $35 a share. Her initial margin requirement is 70 percent and the maintenance margin is 30 percent. What is the highest the stock price can go before she receives a margin call?

• A) $38.97
• B) $40.15
• C) $42.08
• D) $43.75
• E) $45.77

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Definitions:

Chester Barnard

An American business executive and author, known for his theories on management and organizational theory, emphasizing the importance of cooperative effort.

Martin Seligman

An American psychologist known for his work on positive psychology, well-being, and interventions to enhance happiness.

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An American mechanical engineer who sought to improve industrial efficiency and is known as the father of scientific management.

Strength

The quality or state of being physically strong or the capacity to endure or resist under stress or challenge.