Suppose that you sell short 500 shares of Intel, currently selling for $70 per share, and give your broker $25,000 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) $74; (ii) $70; (iii) $66? Assume that Intel pays no dividends.

(i) Rate of return	%
(ii) Rate of return	%
(iii) Rate of return	%

b.

If the maintenance margin is 25%, how high can Intels 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.

(i) Rate of return	%
(ii) Rate of return	%
(iii) Rate of return	%

Margin call will be made at price

$ or higher