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2. Investor A has an agreement with broker B, which allows A to make short sales of company XYZ's shares (the shares might be borrowed

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2. Investor A has an agreement with broker B, which allows A to make short sales of company XYZ's shares (the shares might be borrowed from B's own portfolio or from the portfolio of one of B's other clients). Suppose that A instructs B to short-sell 100 shares at a market price of S10 each the proceeds, $1000 deposit of, say, $400. Sooner or later A will return the borrowed shares instructing B to purchase 100 XYZ shares requires A to maintain the initial margin rate, what will investo price rises to $15? Did this transaction use leverage and why? (15 points) . B holds in A's margin account and also demands an additional at the ruling market price. IfB r A do if the

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