Question

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.)

Answer 1

Step-by-step explanation:

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