Suppose that you sell short $500$ shares of XTel, currently selling for $$40$ per share, and give your broker $$15,000$ to

establish your margin account.

Required:

a$.$ If you earn no interest on the funds in your margin account, Assume that XTel pays no dividends. So what will be your

rate of return after one year if XTel stock is selling at:

Note: Negative value should be indicated by a minus sign. Round your answers to $2$ decimal places.

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

$P$

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

Note: Negative value should be indicated by a minus sign. Round your answers to $2$ decimal places.

Df

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