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Unformatted text preview: loan? 1 Chapter 3 Example on Short Sale Suppose you borrowed 100 Citigroup (C) shares from your broker and sold them for $29.44 a share at the end of 2007. Your broker requires 50% initial margin in short sales, which you covered using the T-bills in your account. C paid a dividend of $1.12 a share during 2008. a) What was your profit if you covered your short position at the end of 2008 when C was trading at $6.71 a share? b) If your broker had a 30% maintenance margin requirement, how far could C rise before you would get a margin call? c) How much money would you have to put into your account in order to satisfy the maintenance margin requirement if C suddenly jumped to $40 a share? 2...
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- Fall '08
- Management, Citigroup, maintenance margin requirement