(The following information applies to Questions 4 ~ 7) Suppose that you sell short 500 shares of Intel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account. Assume that you earn no interest on the funds in your margin account, and the maintenance margin is 25%.

Question 4:

What will be your rate of return after 1 year if Intel stock is selling at $16 and paid no dividend?