You Short Sold 500 Shares of Jasper Stock at $41

question 1

Multiple Choice

You short sold 500 shares of Jasper stock at $41 a share at an initial margin of 60 percent.What is the highest the stock price can go before you receive a margin call if the maintenance margin is 40 percent?

• A) $46.86
• B) $47.08
• C) $55.50
• D) $56.90
• E) $57.40

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Definitions:

Average Amount

The average amount is the sum of figures divided by the number of figures, used to find the central or typical value in a set of data.

Cheques Clear

The process by which a bank verifies the funds available in the account of the check issuer and transfers the specified amount to the recipient's account.

Miller-Orr Model

A financial management model that helps firms manage cash balances by setting upper and lower limits on cash reserves.

Optimal Upper Cash Limit

The optimal upper cash limit is the maximum amount of cash a company determines it should hold to efficiently manage transactions and emergencies while minimizing holding costs.