A trader opens a brokerage account and purchases 100 shares of Internet Dreams at $58 per share. She borrows $2,200 from her broker to help pay for the purchase. The interest rate on the loan is 12%.

a.) What is the margin in the traders account when she first purchases the stock?

Hint: (initial purchase price minus net borrowing = margin amount)

b.) If the share price falls to $48 per share by the end of the year, what is the remaining margin in her account?

Hint: (Remaining margin = Ending equity in account/Current value of the stock)

Hint: (Ending equity in account = current value of stock * (Principal (1 + Interest rate)))

c.) What is the rate of return?

Hint: Rate of return = ending equity in account initial equity in account / initial equity in account)