(a) You purchased 100 shares of IBM common stock on margin at $120 per share. Assume the initial margin is 50%. The interest rate on the margin loan is 5% per annum. What will be the investors rate of return (ignoring dividends) if the stock price increases by 10% one year later? (b) You sold short 100 shares of common stock at $120 per share. The initial margin is 50%. Ignore the interest on margin and dividend. At what stock price would you receive a margin call if the maintenance margin is 25%?

(b) You sold short 100 shares of common stock at $120 per share. The initial margin is 50%. Ignore the interest on margin and dividend. At what stock price would you receive a margin call if the maintenance margin is 25%?