Question in attached file. Document Preview: You decide XYZ Inc. stock is overpriced at $40 and you want to sell short the stock, (a) What is the maximum number of shares you can sell if you have...

Question in attached file.


1. You decide XYZ Inc. stock is overpriced at $40 and you want to sell short the stock, (a) What is the maximum number of shares you can sell if you have $10,000 to invest and the initial margin is 50% for short sales? Show your calculation (b) What is the first price that results in a margin call if the maintenance margin on short positions is 30%? Show your calculation 2. Find an estimate of cash flow for MSFT (Microsoft Corporation) (can use levered cash flow or EBITDA but make sure it is adjusted to be a per share calculation) and (a) Using dividends, estimate the intrinsic value of the stock assuming a 0% growth rate for the next 2 years, a 6% growth rate in perpetuity thereafter, and a 9% discount rate (b) Using cash flows, estimate the intrinsic value of the stock assuming a 0% growth rate for the next 2 years, a 6% growth rate in perpetuity thereafter, and a 9% discount rate