3. You are bullish on Apple stock, which is currently selling at $110 per share. You contribute $11,000 and borrow an additional $2,750 from your broker at an interest rate of 6% per year and invest $13,750 in the stock.

(a) What is your rate of return if the stock price increases 10% during the next year?

(b) How far does the stock price have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately.