Suppose Cardinal Nations (CRDN) stock is selling for $50 per share. At this price, you believe the stock is clearly OVERvalued. Thus, you decide to short as much CRDN stock as possible using margin and the $8,400 cash in your brokerage account. Assume an initial margin requirement of 60% and a maintenance margin requirement of 40%.

1) How many shares of CRDN stock can you short? (assume you cannot short fractions of a share thus, be careful how you round your answer)

2) At what price will you receive a margin call?

3) Assume the stock price increases to $61 per share and you receive a margin call. You decide to send the broker cash to increase the assets in your account. How much cash must you send to get your margin back to the initial margin requirement of 60%?

4) Instead of sending cash as in part 3, you decide to cover just enough of your position using cash in your brokerage account to get the margin back to 60%. How many shares must you cover?