Assume that you expect the price of a stock to go down in the near future and you sell short 100 shares of that stock. The current market price of the share is $50.

a. What is the maximum amount of cash equivalents that you must put up with your broker to abide by the Federal Reserve’s initial margin requirement of 50%?

b. If your broker has a maintenance margin of 25% of the value of your short position, how far can the price of the stock rise before you get a margin call?