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You are bearish on Telecom and decide to sell short 100 shares at the current market price of $50 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position?

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TomShelby

Answer:

We will provide 2,500 dollars in cash or securities to realize the transaction

Explanation:

100 shares x $50 per share = $ 5,000

The total amount of the operation is for 5,000 dollars. we are requiresd to provide a safety of 50% of this value

5,000 dollars x 50% margin requirement = 2,500 dollars

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