You sold short 200 shares of common stock at $60 per share. The initial margin is 60%. Your initial investment was

A) $4,800

B) $12,000

C) $5,600

D) 7200 or 7300

D) 7200 or 7300

Explanation:

Initial Margin Rate = 60%

No. of Shares sold = 200

Price of Shares = $60

Amount of Sale = 200 x $60 = $12,000

Initial Investment = Amount of Sale x Initial Margin

Initial Investment = $12,000 x 60%

Initial Investment = $7,200

So the correct option is D) 7200 or 7300 as Initial margin is the minimum amount as a security required to trade in the market. An investor required 60% of the deal to deposit as Initial margin.