1. David sells short 3,951 shares of a stock at $143 per share. The initial margin requirement is 26%. The investor earns no interest on funds in the margin account and no dividends are paid. What is the investor's rate of return after one year if the short sale is covered at $57 per share?

2. John short sold 1,478 shares of XYZ common stock at $962 per share. The initial margin requirement was 39%. What was John's Initial investment?

3. Sam purchases 1,483 shares of ABC common stock on margin at $314 per share. The initial margin is 67% and the maintenance margin is 20%. At what price will Sam get a margin call? (Assume the stock pays no dividends and ignore interest on margin loan.)

4. The price of Stock A and Stock B at time 0 is $58 and $113 respectively. At time 1, the price of stock A goes to $69 and price of stock B goes to $118.The number of stock outstanding for stock A and stock B are 500 and 720 respectively. Calculate the rate of return on an equal weighted index of the two stocks.

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