An investor opens a brokerage account and purchases 2700 shares of ABC at $100 per share. She borrows $90,000 from her broker to help pay for the purchase. The interest rate on the loan is 10%.

Another investor opened an account to short sell 80,000 shares of ABC from the problem above. The initial margin requirement was 50%. (The margin account pays 5% interest.) A day later, the price of ABC has risen from $100 to $120.

a. What is the remaining margin in the account? b. If the maintenance margin requirement is 30%, will the investor receive a margin call? c. At what price will she receive a margin call? d. What is the rate of return on the investment if at the end of the year stock price is $110 and the stock has paid a dividend of $10 per share?