Initial Margin requirement 50%

No. of shares bought 200

Price of the stock 50 dollars

Borrowed amount 5000 dollars

Initial Equity 5000 dollars

Increase in price of stock 20% 60 dollars

New equity 7000 dollars

Equity position (%) 58.33333 %

Return on 5000 dollar investment 40 %

Leverage factor = 1/percent margin 2

Stock return 20 %

Return on investment 40 %

Maintenance Margin 25%

Margin Call price 33.33333

Equity position 1666.667 =200P-5000

% Margin 0.25 =(200P-5000)/(200P)

At margin call 25% (200P-5000)/(200P) = 25%

33.33333
Initial Margin requirement 50%

No. of shares bought 200

Price of the stock 50 dollars

Borrowed amount 5000 dollars

Initial Equity 5000 dollars

Increase in price of stock -20% 40 dollars

New equity 3000 dollars

Equity position (%) 37.5 %

Return on 5000 dollar investment -40 %

Leverage factor = 1/percent margin 2

Stock return -20 %

Return on investment -40 %

5000

5000

40

3000

0.375

-40

2
Initial Margin requirement 50%

No. of shares bought 200

Price of the stock 50 dollars

Borrowed amount 5000 dollars

Initial Equity 5000 dollars

Increase in price of stock 20% 60 dollars

Interest on borrowed funds 4%

Commission 100 dollars on transaction

New equity 6700 dollars

Equity position (%) 55.83333 %

Return on 5000 dollar investment 34 %

Initial Margin requirement 50%

No. of shares bought 200

Price of the stock 50 dollars

Borrowed amount 5000 dollars

Initial Equity 5000 dollars

Increase in price of stock -20% 40 dollars

Interest on borrowed funds 4%

Commission 100 dollars on transaction

New equity 2700 dollars

Equity position (%) 33.75 %

Return on 5000 dollar investment -46 %

Initial Margin requirement 25%

No. of shares bought 60

Price of the stock 1000

Borrowed amount 45000

Initial Equity 15000

Increase in price of stock 20% 1200

New equity 27000

Equity position (%) 37.5 %

Return on 5000 dollar investment 80 %

Leverage factor = 1/percent margin 4

Stock return 20 %

Return on investment 80 %
Initial Margin requirement 25%

No. of shares bought 60

Price of the stock 1000

Borrowed amount 45000

Initial Equity 15000

Increase in price of stock -20% 800

New equity 3000

Equity position (%) 6.25 %

Return on 5000 dollar investment -80 %

Leverage factor = 1/percent margin 4

Stock return -20 %

Return on investment -80 %

833.3333

Maintenance margin 10% 833.3333

Margin price 833.3333
1800 rupees he has to pay for maintaining the maintenance margin

3000
0.0625
tenance margin
short selling at Price 40
going long at Price 30
Prices 60 35 20
gain from long position 300000 50000 -100000
gain from short position -200000 50000 200000

Total gain 100000 100000 100000

 ER SD Weights
A 0.16 0.07 0.054054
B 0.09 0.04 0.945946

Correlation 0.5

Expected Return 0.0937838

Variance 0.00159
Weight 1