 # Margin Call Question

John has 50,000 in cash in his margin account. The broker charges 6% on borrowed funds and commision of 3% on both buy and sell trades. Initial margin reqirement = 50% and maintenance margin = 30%. He uses maximum margin to SELL SHORT XYZ stock, currently trading at \$34.9. XYZ pays no divdend. If he wants to maximize his margin, what is the max # of shares he could sell short, and what is the trigger margin price. A) # of shares = 2703 margin trigger = 58.17 B) # of shares = 2703 margin trigger = 40.27 C) # of shares = 2865 margin trigger = 58.17 D) # of shares = 2865 margin trigger = 40.27 I would love the explanation for this problem. Im having problems with these calcluations b/c of SELLING SHORT and not buying long, in which the calculations seem to be str8 forward.

is it D? Trigger Price = 34.9 * 1.5/1.3 = 40.27 Margin balance = 50,000. Intial margin is 0.5. So he can trade for 50000/0.5 = 100,000. 100,000/34.9 = 2865.

Whats the source of question?

Stalla. i have the explanation, its just long, ill post it later