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2(Short sale) Suppose you are pessimistic about the prospect of Bear Company (BEAR), whose stock is currently selling for S60 per share. You decide to
2(Short sale) Suppose you are pessimistic about the prospect of Bear Company (BEAR), whose stock is currently selling for S60 per share. You decide to short sell 200 shares of BEAR and deposit $9,000 in your brokerage account as margin. The initial and maintenance margin is 50% and 25%, respectively. Assume you earn no interest on the funds in your margin account. of 50%? (a) In practice, what's the maximum number ofshares you can short sell with the initial margin (b) How high can BEAR's price rise before you get a margin call from your broker? c) Suppose BEAR's price really goes down, and you are able to close your short position by buying 200 BEAR shares at $50. What is your rate of return (%)? (d) If BEAR pays a dividend of S2 before you close the short position by buying 200 BEAR shares at$50, what is your rate of return (%)? (e) What is the maximum possible loss (S of vour short position
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