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Question 2 a. Today you short sell 1,000 shares of Stock Z, which is trading at $50 per share. Stock Z does not pay any

Question 2

a. Today you short sell 1,000 shares of Stock Z, which is trading at $50 per share. Stock Z does not pay any dividend, and the interest rates on cash and collateral are 0%.

The initial margin is 50%. What is the amount of equity (net worth) in your account?

b. A day later you receive a margin call, when the price is $60. What is the maintenance margin?

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