Question 3. (20 points) A trader, Anna, has initial capital of $7000, and she wants to buy $10,000 in stock X. The price of the stock is currently $100 per share. The broker requires the initial margin to be at least 50% and sets the maintenance margin to be 30%. When the maintenance margin threshold is hit, the broker asks the investors to contribute additional capital. If the investor does not turn up the requested amount of capital, the broker liquidates the investor's position to bring the margin back above the threshold. The stock X doesn't pay any dividends and the margin loan rate is zero. A) (4 points) If Anna borrows $3000 from her broker to complete the purchase, what's her initial margin? B) (6 points) Denote margin loan as Security B. Consider Anna is holding a portfolio consisted of Stock X and Security B, write out the weights on X and B: (write down the weights in percent) Weight on X, Wx= Weight on B, W35 C) (10 points) How far can the stock price decline before hitting the maintenance margin? Question 3. (20 points) A trader, Anna, has initial capital of $7000, and she wants to buy $10,000 in stock X. The price of the stock is currently $100 per share. The broker requires the initial margin to be at least 50% and sets the maintenance margin to be 30%. When the maintenance margin threshold is hit, the broker asks the investors to contribute additional capital. If the investor does not turn up the requested amount of capital, the broker liquidates the investor's position to bring the margin back above the threshold. The stock X doesn't pay any dividends and the margin loan rate is zero. A) (4 points) If Anna borrows $3000 from her broker to complete the purchase, what's her initial margin? B) (6 points) Denote margin loan as Security B. Consider Anna is holding a portfolio consisted of Stock X and Security B, write out the weights on X and B: (write down the weights in percent) Weight on X, Wx= Weight on B, W35 C) (10 points) How far can the stock price decline before hitting the maintenance margin