The current market price for Google stock is $800 per share and you have $40,000 of your own money. Suppose your broker's initial margin requirements is 50% of the value of the position and maintenance margin is 30% of the value of the position.
a. What is your maximum possible loss if you short Google at $800?
b. Suppose you are bullish on Google and buy 100 share of Google at $800 per share. How long can the price of the stock drop before you get a margin call if the maintenance margin is 30% of the value of the short position?
c. Suppose you are bearish on Google and short 100 share of Google at $800 per share. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position?