SOCIOL 182 Lecture Notes - Lecture 12: Nxp Semiconductors, Underwriting, Risk Premium
Document Summary
Using a margin account, 300 shares are short sold for per share. Initial margin = proceeds + cash nxp/ nxp. 300x30=,000 with an initial margin requirement of 45% the investor has to deposit 9000 x 0. 45 = ,050 with the broker. Using a margin account, 200 shares are short sold for per share. The broker required that the investor initially added 2,250 in cash to the short sale proceeds in the margin account. [2250+25*200 27*200] / [27*200] = 0. 33 < 0. 4 margin call will be issued. Suppose an underwriter sold 11 million shares while the company only issued 10 million. Explain the underwriter sells 1 mln shares short. When it is time to close short position, the underwriter will buy additional 1 mln shares from the issuer at the ipo price exercising the green shoe provision. It is better than buying the shares it shorted from the secondary market because market price has increased beyond the.
