In December, you sold short 100 shares of BOK at $15 per share. The initial margin requirement is 40%. You receive no interest for the cash deposited in your brokerage account.

a.Suppose there is no maintenance margin requirement. At what price will you not be able to close your position (i.e., buy the stock back)?

b.If the stock price goes up to $242 per share overnight and you are forced to close your position, what is the rate of return you have achieved? Assume the stock paid no dividend.

c.If the stock keeps going up, what is the maximum amount you can lose?