1. Assume that you purchase 300 shares of XYZ stock on margin for $50 per share. If the initial margin is 50% and the maintenance margin is 30%; a-) What is the price that will trigger a margin call? Assume that the price dropped to $35 per share and your broker wants you to bring the 2* margin back up to 50%; b-) How much cash do you have to pay to meet the margin call? c-) How much cash do you have to pay to meet the call if you are only interested in keeping 200 shares? d-) How many shares of XYZ do you have to sell to meet the same margin call? e-) Assume the margin call never happened. If you can sell the shares for $64 per share one year later and your broker is charging 6 % annual interest on the loan, what is the rate of return on this investment? 2. Suppose you sell short 400 shares of common stock at $30 per share. The initial margin is 60% and the maintenance margin is 40%. a-) At which price will you get a margin call? b-) Assume the price jumped to $35 per share and your broker wants you to bring the margin back up to the initial. How much more cash do you have to invest? c) What is your rate of return (assuming the margin call never happened) if you close the position at a price of $19 per share one year later, you earned 4% interest on your initial margin deposit over the year, and there was a dividend of S0.75 paid by the company at the end of year