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12. You nd out that your friend purchased $20,000 of UZL stock on margin using only $6000 of his own. He tells you that he's

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12. You nd out that your friend purchased $20,000 of UZL stock on margin using only $6000 of his own. He tells you that he's a genius because he'll double his money if UZL goes up 20% but he'll only lose as 20% if UZL goes down 50%. Knowing that the maintenance margin on his account is 25%, explain to your simple-minded friend what will really happen in each scenario. A] He's a genius, he's right! I wish I'd made the same trade! B) He will actually earn a return of 166% if the stock increases 20% and will lose 33% if the stock falls 20% C) He will actually earn a return of 66% if the stock increases 20% and will have margin calls totaling $2K if the stock declines 20% D] He will actually earn a return of 66% if the stock increases 20% and will lose 133% if the stock falls 20% E) He will actually earn a return of 66% if the stock increases 20% and will have margin calls totaling $6K if the stock declines 20%

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