Question: Assume you deposit $ 2 0 0 , 0 0 0 into a margin account, with an initial margin requirement of 6 0 % and

Assume you deposit $200,000 into a margin account, with an initial margin requirement of 60% and a maintenance margin of 30%. You are interested in trading Apple's (AAPL) stock, which is currently priced at $245.
a) Suppose you believe, AAPL is undervalued, and you would like to take a long position. How many shares of AAPL can you purchase using the maximum allowable margin?
b) What price can AAPL fall to before you receive a margin call?
c) Suppose now you believe that AAPL is overvalued, and would like to take a short position, by selling 600 shares, at its current price of $245. At the end of one year, you buy 600 shares of AAPL at $208 to close out your position. The interest rate your broker charges for conducting the transaction is 10 percent. What is your rate of return on the investment?
Assume you deposit $ 2 0 0 , 0 0 0 into a margin

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