Lets assume Joe Campbell had $33051.58 of cash in his account. He then short sold 8400 shares of KBIO at $2. After the market close, the stock surged to $18.5. Assume the initial margin requirement is 50%, and the maintenance margin is 35%.

a. Can his $33051.58 of cash satisfy the initial margin requirement?

b. At what price he would receive a margin call?

c. Joe Campbell valued the stock at $1. If he was right eventually, how much can he earn?

d. How much does Joe Campbell owe when the stock price surged to $18.5? Hint: you need to calculate his shareholders equity, like what we did in the class.

e. On 07/31/2017, KBIO had a price of $1.6, so, Joe Campbell was right eventually. However, why he lost so much money? What can you learn from his failure?