Suppose that you sell short $400$ shares of Xtel, currently selling for $$40$ per share, and give your broker $$8,000$ to establish your margin account.

Required:

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$)$ $$43$; $($ii$)$ $$40$; $($iii$)$ $$37?$ Assume that Xtel pays no dividends.

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

Redo parts $($a$)$ and $($b$),$ but now assume that Xtel also has paid a year$-$end dividend of $$2$ per share. The prices in part $($a$)$ should be interpreted as ex$-$dividend, that is$,$ prices after the dividend has been paid.