D$$e Trader opens a brokerage account and purchases $300$ shares of Internet Dreams at

$$40$ per share. She borrows $$4,000$ from her broker to help pay for the purchase.

The interest rate on the loan is $8\%.($LO $3-4)$

a$.$ What is the margin in D$$e$\text{'}$s account when she first purchases the stock?

$b.$ If the share price falls to $$30$ per share by the end of the year, what is the remaining

margin in her account?

c$.$ If the maintenance margin requirement is $30\%,$ will she receive a margin call?

d$.$ What is the rate of return on her investment?

Old Economy Traders opened an account to short$-$sell $1,000$ shares of Internet Dreams

from the previous question. The initial margin requirement was $50\%.($The margin

account pays no interest.$)$ A year later, the price of Internet Dreams has risen from

$$40$ to $$50,$ and the stock has paid a dividend of $$2$ per share. $($LO $3-4)$

a$.$ What is the remaining margin in the account?

b$.$ If the maintenance margin requirement is $30\%,$ will Old Economy receive a

margin call?

$c.$ What is the rate of return on the short position $($treating the initial margin as the

amount invested$)?$