You sold short 100 shares of common stock at \$75 per share. The initial margin is 50%. At what stock price would you receive a margin call if the maintenance margin is 30%?

sell their shares through a broker

sell their shares to the issuer at a discount to Net Asset Value

hold their shares to maturity

sell their shares to the issuer at a premium to Net Asset Value

sell their shares to the issuer for Net Asset Value

21,619,346.92

26,124,567.73

24,860,161.59

25,693,645.25

22,930,546.28

II and III only

I and III only

III and IV only

I and II only

10.40%

10.88%

11.54%

11.63%

9.32%

5.74%

4.72%

4.38%

6.67%

6.30%

E(r) = 0.10; Variance = 0.25

E(r) = 0.15; Variance = 0.20

E(r) = 0.12; Variance = 0.35

E(r) = 0.10; Variance = 0.20

E(r) = 0.15; Variance = 0.25

final wealth will be greater than initial wealth

investors will lose money

terminal wealth will be less than initial wealth

more than one outcome is possible

the standard deviation of the payoff is larger than its expected value

They only accept risky investments that offer risk premiums over the risk- free rate

They only care about the rate of return and accept investments that are fair games

They only care about the rate of return

They accept investments that are fair games

They are willing to accept lower returns and high risk

Both their short-term nature makes their values insensitive to interest rate fluctuations and the inflation uncertainty over their time to maturity is negligible

both the inflation uncertainty over their time to maturity is negligible and their term to

their short-term nature makes their values insensitive to interest rate fluctuations

the inflation uncertainty over their time to maturity is negligible

their term to maturity is identical to most investors' desired holding periods

1.20

0.46

0.58

0.73

0.60