Margin Call Price for Short

[ZXL]

Could someone help explain the answer to the following question ? According to my calculations the price would have to be 33.33 for the short position to receive a call. Thanks.
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An investor short sells 400 shares of Disney for $25 a share. The initial margin requirement (IMR) is 50 percent, and the maintenance margin requirement (MMR) is 25 percent.
At what price would an investor receive a margin call?
A) $20.00.
B) $30.00.
C) $22.00.
D) $35.00.
Your answer: D was incorrect. The correct answer was B) $30.00.
Ps = [25(1 + 0.5)] / 1.25Ps = 30.00.

 

[cpk123]

This is a formula that is there in Schweser – but I have not seen it anywhere else.
Margin, Short, Price for a call = P * (1+I) / (1+M) I=Initial Margin, M=Maint Margin.
For Margin, Purchase : P ( 1-I) / (1-M)

 

[CFALondon0109]

yeah i can’t seem to find it in the CFA books….not sure that type of question would really be asked

 

[JoeyDVivre]

I don’t know about these formulas. Why would anybody try to memorize that? So if the initial margin is 50%, you put up 12.50. The question is what price does the stock need to rise to so that you now have less than 25% of the stock’s price in your margin account. A little algebra does it -
(12.50 - x)/(25 + x) = 0.25
12.5 -x = 6.25 + .25 x
6.25 = 1.25 x
5 = x
or even easier is to check out the only two possible answers (30, 35) - e.g. - if the stock goes to 35 you have lost $10 per share in your margin account leaving you with $2.50 per share which ain’t 25% of 35.