Assume that you short-sell 500 shares of a stock at a price of $45 a share at a 50% initial margin.
A. If, after one year, the price instead rose to $50 and paid a $2 dividend what would be your return? (4 points)
B. How could a stop-buy order reduce your loss exposure?
C. If the maintenance margin was 25%, at what price would you receive a margin call?