Assume that you are bullish on google and buy 100 share of

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The current market price for Google stock is $800 per share and you have $40,000 of your own money. Suppose your broker's initial margin requirements is 50% of the value of the position and maintenance margin is 30% of the value of the position.

a. What is your maximum possible loss if you short Google at $800?

b. Suppose you are bullish on Google and buy 100 share of Google at $800 per share. How long can the price of the stock drop before you get a margin call if the maintenance margin is 30% of the value of the short position?

c. Suppose you are bearish on Google and short 100 share of Google at $800 per share. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position?

Reference no: EM13477754

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