Question #1: Margin Trading and Short Selling [24 Points) Use the following information to answer Parts (a) - (c) Suppose that Leo wants to purchase 4,000 shares of Futu Holdings Limited (FUTU). Shares of FUTU currently trade at $143.62 per share. Suppose the initial margin percentage is 60% and assume that the interest rate on margin accounts is 5%. (a) What is the amount that Leo must deposit into his margin account in order to buy the 4,000 shares of FUTU on margin? [2 Points) (b) What would be Leo's rate of return if he purchased the 4,000 shares of FUTU on margin and the price of the stock increased to $150.20 next year. Assume that the stock does not make any expected dividend payments. (Hint: Make sure to take into account the interest rate on margin accounts in your calculations.] Round your final answer to two decimal places. [6 Points) (c) How far would the price of FUTU have to fall before Leo receives a margin call if the maintenance margin is 25%? [6 Points) Round your final answer to two decimal places. [6 Points) Use the following information to answer Parts (d) - (f) You open up a trading account with Merrill Lynch. You have decided to sell short 4500 shares of Tencent Holdings Limited (TCEHY) at a price of $76.98. Assume that the initial margin percentage is equal to 60% and the maintenance margin is equal to 25%. (d) What would the share price of TCEHY have to be in order for you to receive a margin call? Round your final answer to two decimal places. [6 Points] (e) What is your maximum possible gain in dollars from this short sell trade? [2 Points) (f) What is your maximum possible loss from this short sell trade? [2 Points)