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investment? 2. Suppose you sell short 400 shares of common stock at $30 per share. The initial margin is 60% and the maintenance margin is
investment? 2. Suppose you sell short 400 shares of common stock at $30 per share. The initial margin is 60% and the maintenance margin is 40%. a-) At which price will you get a margin call? b-) Assume the price jumped to $35 per share and your broker wants you to bring the margin back up to the initial. How much more cash do you have to invest? c-) What is your rate of return (assuming the margin call never happened) if you close the position at a price of $19 per share one year later, you earned 4% interest on your initial margin deposit over the year, and there was a dividend of $0.75 paid by the company at the end of year
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