Suppose that you sell short 1,000 shares of Intel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account.

a) If you earn no interest on the funds in your margin account, what will be your rate of return after 1 year if Intel stock is selling at: (i) $22; (ii) $20; (iii) $18? Assume that Intel pays no dividends.

b) If the maintenance margin is 25%, how high can Intel's price rise before you get a margin call?

c) Redo parts a) and b), but now assume that Intel also has paid a year-end dividend of $1 per share. The prices in part a) should be interpreted as ex-dividend, that is, prices after the dividend has been paid