You are very optimistic about the personal computer industry, so you buy 200 shares of Microtech Inc. at $45 per share. You are very pessimistic about the machine tool industry, so you sell short 300 shares of King Tools Corporation at $55. Each transaction requires a 40 percent margin balance.

a) What is the initial equity in your account?

b) Assume the price of each stock is as follows for the next three months (month-end).

Compute the equity balance in your account for eachmonth:

Month October November December Microtech S51 S39 S37 Inc. King Tools Corp S48 S62 S40