Jordan short sells 500 shares of Facebook at $200.Her broker has a 50% margin requirement.Facebook does not pay a dividend and commissions and other charges total $50.What dollar amount of collateral must she have in her account?

Question

Quizplus · Accepted Answer

The margin requirement is 50%, so Jordan must have 50% of the value of the shares in her account as collateral. The value of the shares is 500 * $200 = $100,000. So, Jordan must have $100,000 * 0.50 = $50,000 in her account as collateral.

Jordan Short Sells 500 Shares of Facebook at $200