Solve:

Margin Trading Exercise $1-1)$

Suppose that the initial margin is $30\%.$ You are buying $200$ shares of Samsung Electronics at

$$30/$share$.$ What is the amount of cash you need to provide?

$1-2)$ If the price decreases to $$25,$ what is your margin $(\%)$ now?

$1-3)$ If you sell at a price of $$25$ one year from now and the margin interest rate is $0\%,$ what is

your rate of return?

$1-4)$ How would your answer change if the margin interest rate is $10\%?$

$1-5)$ If the maintenance margin is $15\%.$ At what price would you have a margin call?

Short Selling Exercise $2-1)$

You are selling $100$ shares of LG Energy Solution short at $$30/$share$.$ If the initial margin is

$40\%,$ how much money do you have to provide today? What is the total amount you have in your

account?

$2-2)$ Suppose that the price of LG Energy Solution increases to $$36,$ what is the margin $(\%)$

now?

$2-3)$ If you close your account one year from now, buying back the stock at a price of $$24.$

Assuming an annual short fee of $10\%,$ paid from the total amount that you borrowed from the

security holder, what is your rate of return? Also assume that the interest rate that you receive for

cash in your brokerage account is $5\%.$ How would your answer change?

$2-4)$ What would happen if $$1$ of dividend is paid in between? What is the rate of return

$($assuming the same short fee and interest rate as above$)$ including dividends?