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please answer question one and question two and show all work
Question 1 (20 points) Suppose you wish to sell short 150 shares of Boeing Co (NYSE BA). The current selling price per share
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Answer #1

1.

Current price of stock (S0) = $30

Intial margin requirement (IMR) = 40%

Maintenance margin requirement (MMR) = 35%

Stock Price that will trigger Margin call for short Postion:

= So* (1 + IMR) (1 + MMR)

(1+0.4) = 30 *」 (1+0.35)

= 31.1111111111111

= $31.11

2.

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

B C D E F G Current stock Price $30.00 Boom Normal Economy Recession Probability 33.33% 33.33% 33.33% Dividend $2.00 $1.00 $0

Cell reference -

B DE Current stock Price 30 Probability 50 Boom Normal Economy Recession =1/3 =1/3 =1/3 Dividend End Stock Price Return 2 1=(

Hope it will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.

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