After an analysis of Lion/Bear, Inc., Karl O%u2019Grady has concluded that the firm will face financial difficulty within a year. The stock is currently selling for $5 and O%u2019Grady wants to sell it short. His broker is willing to execute the transaction but only if O%u2019Grady puts up cash as collateral equal to the amount of the short sale. If O%u2019Grady does sell the stock short, what is the percentage return he loses if the price of the stock rises to $7? What would be the percentage return if the firm went bankrupt and folded?

Please include calcuations whereas I am struggling with this one! Thank you!!