In Problem 13, suppose the call money rate is 5 percent and you are charged a 1.5 percent premium over this rate. Calculate your return on investment for each of the following share prices one year later. Ignore dividends.
a. $56
b. $48
c. $32
Suppose instead you had simply purchased $8,000 of stock with no margin. What would your rate of return have been now?

Data From Problem 13

Suppose you purchase 500 shares of stock at $48 per share with an initial cash investment of $8,000. If your broker requires a 30 percent maintenance margin, at what share price will you be subject to a margin call? If you want to keep your position open despite the stock price plunge, what alternatives do you have?