An investor intends to sell short 1000 shares at $100 a share. The stock pays an annual dividend of $2 a share. The investor must put up collateral to meet the 50% margin requirement. The proceeds from the sale of the stock along with the margin deposit must remain in the account. They are borrowing shares from the broker, and are not borrowing money from the broker.

• What is their rate of return if the stock goes up 30%?
• What is their rate of return if the stock does down by 30%?
• If the maintenance margin is 30%, at what price will they receive a margin call?