Answered

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A customer sells short 100 shares of abc at $17 as the initial transaction in a new margin account. the customer must deposit? a $850 b $1,000 c $1,700 d $2,000

Sagot :

The customer must deposit $850 for the new transaction to take place. The number of shares the customer sells short is 100 shares. The rate of the shares is $17.

The total amount of the transaction is $1700.

The customer must deposit 50% of this amount as a deposit.

50% of $1700 = $850.

The amount of the deposit is $850.

Short selling is the process the investor does when he first sells the stock without having the share in his name. this is done when the investor is sure that the price will go down and he will be able to buy back the share at a lower cost. In this way the investor makes money. For this transaction, the investor has to deposit an amount of 50% as a deposit with his broker.

Learn more about short selling here:

https://brainly.com/question/17165279

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