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B. You short 100,000 shares of Newton-Eagle Corp., a manufacturer of hockey pucks and other hard rubber products, at $5/share. The initial margin requirement is
B. You short 100,000 shares of Newton-Eagle Corp., a manufacturer of hockey pucks and other hard rubber products, at $5/share. The initial margin requirement is 50% and the minimum margin requirement is 35%.
(i) At what share price for Newton-Eagle will you first receive a margin call?
(ii) What is the maximum profit you can make from this position in (a) absolute dollars and (b) in percentage terms relative to the capital you put at risk?
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