You believe the price of Rose, Inc., stock is going to fall and you've decided to sell 1,000 shares short. If the current share price is $47, construct the equity account balance sheet for this trade. Assume the initial margin is 65 percent. (Do not round intermediate calculations. Input all amounts as positive values.)

Question

Jean Yoder

Business

28 August, 21:41

You believe the price of Rose, Inc., stock is going to fall and you've decided to sell 1,000 shares short. If the current share price is $47, construct the equity account balance sheet for this trade. Assume the initial margin is 65 percent. (Do not round intermediate calculations. Input all amounts as positive values.)

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Mcintyre · Answer 1

Proceeds from sale = 1000 * $47 = $47,000

Initial margin = $30,550 * 0.65 = $30,550

So, Assets

Proceeds from sale: $47,000

Initial margin deposit: $30,550

Total: $77,550

And, Liabilities and account equity

Short position: $47,000

Account equity: $30,550

Total: $77,550