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

Intel

pays

no

dividends.

b.

If the

maintenance

margin

is 25%,

how

high

can

Intel's

price

rise

before

you

receive

a

margin

call?

c.

Redo

parts

(a)

and

(b)

above

assuming

Intel

pays

a $1

dividend

per

share.

Assume

the

prices

in part

(a)

are

ex-dividend

- that

is - prices

after

the

dividend

has

been

paid.