Aby wants to short 500 shares of LC at $18 a share, while Bobby wants to buy 500

at the same price on margin. If both face an initial margin requirement of 60% and

a maintenance margin requirement of 50%, determine how much cash each must have

in order to enter this transaction. Suppose that each of them has exactly the required

amount of cash, and they enter their desired positions.

(a) Construct the balance sheets for both Aby and Bobby respectively.

(b) Find the price at which Aby will get a margin call, and the price at which Bobby

will get a margin call.