What would be your dollar return if the price of ibm stock

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Question 1:

Assume that IBM stock is selling for $110 per share and that you short sell 200 shares of the stock.

What would be your dollar return if the price of IBM stock drops to $95 per share?
What would be your dollar return if the price of IBM stock increases to $120 per share?
Is there a limit to your gains? Is there a limit to your losses? Explain.

Question 2:

Andy currently has $5,400 that he wants to invest in Best Sell Company's stock, which currently is selling for $30 per share. The brokerage firm through which Andy invests has a 60 percent margin requirement and a 50 percent maintenance margin. If he margins the maximum amount, how many share of Best Sell can Andy buy? At what price will Andy receive a margin call?

Reference no: EM133264570

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