Buying on margin and short selling problems Use these approximate closing prices to work these problems: INTC = 126, MCD = 32.

1. If you bought Intel (INTC) using cash at yesterdays closing price and the price increases to 150, what is your dollar gain? What is your percentage gain on your initial investment?

2. From the previous problem, what is your initial equity position if you bought 100 shares on margin with an initial margin requirement of 50%? What is your final equity position if the price immediately increases to 150? What is your percentage gain or loss? What is the relationship between change in stock price and change in equity when buying on margin?

3. Assuming maintenance margin requirements of 25%, will you get a margin call and how much will you have to deposit if the price drops to a) 80 b) 70 c) 60 ?

4. If Intel goes to 80 on this margined position, what is your percentage gain or loss?

5. You are bearish and decide to short sell 100 shares of McDonalds (MCD). The margin requirement is 50%. How much is your initial margin?

6. If McDonalds goes to 25 immediately, what is your dollar gain or loss? What is your percentage gain or loss on your investment ( initial equity)? 7. If McDonalds goes to 40 immediately, what is your dollar gain or loss? What is your percentage gain or loss on your initial equity?

If someone could help me understand the steps here, it would be a great help.