Buying on Margin The maintenance margin is 30%. An investor purchases $20K of IBM stocks. She pays $12K cash and borrows $8,000 from her broker. Investor pays 10% annual interest on the call loan. What is the margin on her account? One year later, the value of IBM stocks decrease to $10K. Will the investor receive a margin call or not? What is the rate of return on the investment? Short sales The maintenance margin is 30%. An investor shorts 1K IBM shares at the price of $20 per share. The investor posts $8K as collateral in his account with the broker. What is the margin on his account? At what price will the investor receive a margin call? What is the rate of return on the investment when the investor receives margin call