. Assume that you buy 200 shares of the Mulligan Corp. on Margin at a price of $75 per share. Your broker requires 60% initial margin and 35% minimum maintenance margin. (9 points total)

a) Assume that a month after the initial purchase your broker charges you $35 in interest, and the price of Mulligan has increased to $90. What was your initial equity in the position and what is your total equity after the increase in stock price? What rate of return did you earn over the time period?

b) Now assume that the stock price falls to $57 per share. What will be the equity in the account? What will be the rate of return on your investment? Will there be a margin call? At what price is a margin call going to be triggered?

c) describe what leverage means in regard to buying on margin. Please be specific.

. Assume that you buy 200 shares of the Mulligan Corp. on Margin at a price of $75 per share. Your broker requires 60% initial margin and 35% minimum maintenance margin.

a) Assume that a month after the initial purchase your broker charges you $35 in interest, and the price of Mulligan has increased to $90. What was your initial equity in the position and what is your total equity after the increase in stock price? What rate of return did you earn over the time period?

b) Now assume that the stock price falls to $57 per share. What will be the equity in the account? What will be the rate of return on your investment? Will there be a margin call? At what price is a margin call going to be triggered?

c) describe what leverage means in regard to buying on margin. Please be specific.