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DEF Firm is currently selling for $40 per share. The cash margin for short sales is 50% of the
market value of the stock, and the maintenance margin is 130% of the current market price of the
stock. Janet arranges to short sell 200 shares of DEF.
(10) The total funds in Janet’s account after the short sale has been completed is
A: $ 0
B: $ 4,000
C: $ 8,000
D: $10,400
E: $12,000
Solution
Total funds = 200 x 40 x 130% = $10,400.Option D.

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  • 1. DEF Firm is currently selling for $40 per share. The cash margin for short sales is 50% of the market value of the stock, and the maintenance margin is 130% of the current market price of the stock. Janet arranges to short sell 200 shares of DEF. (10) The total funds in Janet’s account after the short sale has been completed is A: $ 0 B: $ 4,000 C: $ 8,000 D: $10,400 E: $12,000 Solution Total funds = 200 x 40 x 130% = $10,400.Option D.