1. (Shorting with margin) Suppose that to short a stock you are required to deposit an amount...
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1. (Shorting with margin) Suppose that to short a stock you are required to deposit an amount equal to the initial price Xo of the stock. At the end of 1 year the stock price is X and you liquidate your position. You receive your profit from shorting equal to Xo - X and you recover your original deposit If R is the total return of the stock, what is the total return on your short?
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