2. You are bullish on Telcom stock. The current market price is $50/share and you plan to purchase the stock on margin. You have $30,000 to invest and your broker has an initial margin requirement of 60% and a maintenance margin of 30%. The interest rate on the broker's funds is 5% per year.

a. How low would the price of Telcom stock has to fall for you to receive a margin call from your broker?

b. Assume that on a very bad earnings call, the CFO if telecom discloses a projected revenue loss of 50% by year end. In response, the stock drops suddenly to $25/Share. How much are you asked to deposit in the account to restore the margin to 30%. (note: margin is calculated as the net worth in the account divided by the market value of the securities)