An investor opens her first brokerage account and purchases $400$ shares of a stock at $$46$ per share.

She borrows $$9,000$ from her broker to help pay for the purchase. The interest rate of the loan is $12\%.$

$5$

$6$

$7$

$8$

$9$

No$.$ of Shares Purchased

Initial Stock Price

Amount Borrowed

Interest Rate on Margin Loan

$400$

$$46\mathrm{.}00$

$$9,000\mathrm{.}00$

$12\mathrm{.}00\%$

$10$

$11$

a$)$ What is the initial margin in her account when she first purchases the stock?

$12$ Initial Value of the Stock Purchase

$13$

Initial Equity Margin $($$$)$

$14$

Initial Equity Margin $\%$

$15$

b$)$ If the price falls to $$37$ per share in two months, what is the remaining margin in her account?

$17$

$18$

If the maintenance margin requirement is $40\%,$ will she receive a margin call?

$19$

Ending Stock Price

$20$

Holding Period in Months

$21$

Maintenance Margin Requirement

$22$ Ending Value of the Stock

$23$

Interest on Margin Loan

$24$ Ending Equity Margin $($$$)$

$25$

Ending Equity Margin $\%$

$26$

Will she receive a Margin Call?

$27$

$28$

c$)$ What is the rate of return on the investment if she sells the shares at the end of the quarter at $$37$ per share?