Recomputed the answer to problem 3 based on a stock decline to $23.75.

Reference Problem 3:

Assume you have a 25 percent minimum margin standard in problems 1 and 2. With a price decline to $28, will you be called upon to put up more margin to meet the 25 percent rule? Disregard the $2,000 minimum margin balance requirement.

Reference Problem 2:

In problem 1, what would the percentage loss on the initial equity be if the price had decreased to $28?

Reference Problem 1:

Assume you buy 100 shares of stock at $40 per share on margin (40 percent). If the price rises to $55 per share, what is your percentage gain on the initial equity?