Dee Trader opens a brokerage account, and purchases 500 shares of Internet Dreams at $50 per share. She borrows $5,000 from her broker to help pay for the purchase. For simplicity, please assume that the interest rate on the loan is 0%.

1. (10 points) What is the margin (in percent) in Dees account when she first purchases the stock?

2. (15 points) In addition to her long position in Internet Dreams, Dee would like to short sell Krispy Kreme Doughnuts which is currently trading at $30 per share. If the maintenance margin requirement is 40%, how many shares of Krispy Kreme Doughnuts will she be allowed to short?

3. (15 points) Assume that Dee short sells the maximum number of shares allowed by her broker. If the share price of Internet Dreams decreases to $40 per share and the share price of Krispy Kreme Doughnuts increases to $40 per share by the end of the year, what is the new margin in her account? Will she get a margin call if the maintenance margin requirement is 25%?