5. Jane opens a brokerage account and purchases 300 shares of Tech. at $42 per share. She borrows $4,000 from her broker to help pay for the purchase. The interest rate on the loan is 6%.

a. What is the margin in $ (i.e. the initial deposit in $) in Janes 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? If the maintenance margin requirement is 30%, will she receive a margin call? Note: you have to pay 6% interest a year, i.e. the amount borrowed will be 6% more by the end of year, this will affect your equity at the time.

c. What is the rate of return (%) on her investment? Hint: calculate the ending andbeginning equity in your account. You also need to deduce the interest payment to get the equity.