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Pat Plummets opens an account to sell short Crazy Cryptocurrency Exchange ( CCE ) . Pat Plummets then shorts 2 0 0 0 shares of

Pat Plummets opens an account to sell short Crazy Cryptocurrency Exchange (CCE). Pat Plummets then shorts 2000 shares of CCE at a price per share of $80. The initial margin requirement is 50%. The broker charges a borrowing fee of 5% per year on the initial value of securities borrowed. No interest is earned on the deposits in the account. The broker requires a 30% maintenance margin.
a. How much does Pat Plummets need to deposit in the account initially?
b. If in one year's time, CCE's stock price has increased to $110 and paid a dividend of $1.50 per share. What is the remaining margin in the account? If Pat closes the position, what rate of return will Pat receive?
c. If in one year's time, CCE's stock price has decreased to $50 and paid a dividend of $1.50 per share. What is the remaining margin in the account? If Pat closes the position, what rate of retum will Pat receive?
d. At what price will Pat receive a margin call if the stock price moves immediately afer putting on the position?
e. At what price will Pat receive a margin call if the stock price moves in one ycar affer the interest and dividend?
f. When CCE's stock actually falls to $2 in one year's time after having paid a dividend of $1.50 per share, what rate of return will Pat receive?
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