The price of the stock go before you get a margin call

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Reference no: EM131012414

You are bearish on AT&T stocks and decide to sell short 100 shares at the current market price of $15 per share. The initial margin requirement is 50% and the maintenance margin requirement is 30%.

a. How high can the price of the stock go before you get a margin call?

b. If you earn no interest on the funds in your margin account, what will be the rate of return after one year if AT&T stock is selling at (i) $20 and (ii) $12.50?

Reference no: EM131012414

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