2. Suppose you short-sell 1000 shares of AOT stock at $30 per share. Assume further the...

 

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2. Suppose you short-sell 1000 shares of AOT stock at $30 per share. Assume further the initial margin requirement was 50%. a) What is the maximum amount you can lose? b) By the end of the year the stock pays dividends of $1 per share and the price of the stock surges to $35. The maintenance margin requirement is 30%. Will you receive a margin call from the broker? c) Find the rate of return on this investment. 2. Suppose you short-sell 1000 shares of AOT stock at $30 per share. Assume further the initial margin requirement was 50%. a) What is the maximum amount you can lose? b) By the end of the year the stock pays dividends of $1 per share and the price of the stock surges to $35. The maintenance margin requirement is 30%. Will you receive a margin call from the broker? c) Find the rate of return on this investment.