1. Margin Ratios:
   1. Long:
      1. Your starting position is as follows:

Assets: Liabilities & Equity

1,000 shrs @ $10 Loan from Broker $4,000

= $10,000 Equity $6,000

What is your starting percentage margin?

2. You believe the stock is going to go up to $15 per share. If it does that, what would be your:
   1. Dollar return on the $6,000 equity you started out with?
   2. The percentage return on the $6,000 equity you started with?

3. Bad news you were wrong. The stock drops to $5 per share. Draw up your new balance sheet:

Assets: Liabilities & Equity

1,000 shrs @ Loan from Broker

= Equity:

What is your percentage margin now?

4. You receive the dreaded margin call. Your broker says you must return your percentage margin to 50%. Your choices are 1) add more cash, or 2) close out some of your position by selling shares:

1. If you do that by adding cash, how much would you need to deposit?

Fill out the resulting balance sheet:

Assets: Liabilities & Equity

1,000 shrs @ 5 Loan from Broker:

= Equity:

2. If you do that by closing some of your position, how many shares would you need to sell, (assuming you could sell as many as you wanted @ $5 per share?)

Fill out the resulting balance sheet:

Assets: Liabilities & Equity

shrs @5 Loan from Broker

= Equity: