Problem 2 - Buying on Margin: (20 marks) Using a margin account, 200 shares are short sold for $40 per share. The initial margin requirement is 45%. 1. If the price of the stock rises to $45 and falls to $25 per share, what is the actual margin in the account? (5 marks) 2. If maintenance margin is 30%, how much can the stock rise before a margin call? (5 marks) 3. Why do investors short sell? What are the main steps in short sale? (5 marks) 4. Is it true that the potential loss on a short sale is infinite