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3. On November 20, 2003, you short sold 5,000 shares of Home Depot at the price of $35 per share. The initial margin requirement is
3. On November 20, 2003, you short sold 5,000 shares of Home Depot at the price of $35 per share. The initial margin requirement is 60% and the maintenance margin is 30%. You can invest your short sale proceeds and cash collateral at 1% per year. The annual interest on the loan you receive from your broker is also 1%. a) To what price must Home Depot climb for you to receive a margin call. (Assume for this part that no interest expense accrued on your loan and no interest on your reinvestment of short sale proceeds and cash)
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