One of the questions in Book 7 mentions the trigger price for a short sale, but this topic is nowhere in the Schweser notes, and I’m trying to search online, but I cannot find any information on it. Is this covered in the CFAI books? If so, can someone please just let me know what it is?
were they talking about Stop Orders?
Trigger price for a short sale = P0*(1+ Initial margin)/ (1+ Maintenance margin)
Trigger Price (Short) =Purchase price* (1+Initial Margin%)/(1+Mantainence Margin%) This is mentioned in schweser, somewhere in SS13
and incidentally this is only in Schweser, not in the CFAI material.
LAWL, i hope it gets asked, then the CFAI people will stop gloating that schweser books don’t cover everything. i’ve used schweser btw.
What if we take into account of interest? What will the margin call price be?
Actually, the question asked for the price at which the margin call would first be received (which you guys gave the correct equation for), however the second part of the question asked for the trigger price, and whether or not this would be higher or lower than the margin call price. Does this make any sense? I swear they just make stuff up in Book 7; a lot of the material in that book isn’t even covered in the Schweser notes, which is ironic since Schweser makes Book 7.