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What is the price at which the investor gets a margin call

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Question - An investor short sells $32,000 worth of a stock priced at $40 per share using 60% initial margin. The broker charges 4% on the margin loan and requires a 35% maintenance margin. The stock pays a $.40-per-share dividend in 1 year, and then the stock is bought at $37 per share.

i. What is the investor's rate of return?

ii. What is the price at which the investor gets a margin call?

iii. How much does the investor have to deposit with their broker if they get a margin call?

Reference no: EM133186293

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