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5. Suppose you buy 200 shares of XYZ at $100 on margin. Your account starts at the initial margin requirement of 50%. The maintenance margin

5. Suppose you buy 200 shares of XYZ at $100 on margin. Your account starts at the initial margin requirement of 50%. The maintenance margin is 25%, and the interest rate on the margin loan is 4%.

a. If the price of XYZ stock increases to $120 after one year, what would be the return on your investment?

b. If, instead, the price of XYZ stock decreases to $80 after one year, what would be the return on your investment?

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