You are bearish on financial services stocks, due to the currency crisis in Argentina and the severe economic problems in Japan. You decide to short Morgan Stanley. At the time you short the stock, it is selling for $72 per share, and you short 100 shares. Your broker requires 50% additional margin in your account, in the form of cash or other securities.

Assume that a year later, the stock is selling for $80 per share, and the stock paid a dividend of $3 per share. What is the margin in the account?

a. 3,300

b. 1,100

c. 1,800

d. 2,500

e. 10,800

f. None of the above

You are bearish on financial services stocks, due to the currency crisis in Argentina and the severe economic problems in Japan. You decide to short Morgan Stanley. At the time you short the stock, it is selling for $72 per share, and you short 100 shares. Your broker requires 50% additional margin in your account, in the form of cash or other securities.

If your broker requires a maintenance margin requirement of 25%, at what price during the year will you receive a margin call, assuming that the stock pays the dividend at some point during that year?

a. 84

b. 86.40

c. 83.08

d. 80.77

e. 18

f. None of the above

You are bearish on financial services stocks, due to the currency crisis in Argentina and the severe economic problems in Japan. You decide to short Morgan Stanley. At the time you short the stock, it is selling for $72 per share, and you short 100 shares. Your broker requires 50% additional margin in your account, in the form of cash or other securities.

Assuming the stock increases to $80 and there is a $3/share dividend, what is the rate of return on this investment? (ignore any margin interest costs)

a. .222

b. -.222

c. -.083

d. -.305

e. -.102

f. None of the above

Note: Please give detailed answer with all calculations and formulas computed in Excel file.