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Compute the remaining margin in the account

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Question - XYZ Traders opened an account to short sell 500 shares of ABC Company. The initial margin requirement was 40%. (The margin account pays no interest.) A year later the price of ABC Company has risen from $25 to $32, and the stock has paid a dividend of $1 per share. Maintenance margin is 25%.

Required -

(a) Compute the remaining margin in the account

(b) Will XYZ Traders receive a margin call?

(c) Compute the return on investment.

Reference no: EM133158470

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