Suppose that you sell short $200$ shares of Xtel, currently selling for $$80$ per share, and give your broker $$10,000$ to establish your

margin account.

Required:

a$.$ If you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: $($i$)$

$$85$; $($ii$)$ $$80$; $($iii$)$ $$75?$ Assume that Xtel pays no dividends.

b$.$ If the maintenance margin is $25\%,$ how high can Xtel's price rise before you get a margin call?

c$.$ Redo parts $($a$)$ and $($b$),$ but now assume that Xtel 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.

Complete this question by entering your answers in the tabs below.

Required $A$

Required $B$

Required C

If the maintenance margin is $25\%,$ how high can Xtel's price rise before you get a margin call?

Note: Round your answer to $2$ decimal places.