De Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per share. She borrows $4,000 from her broker to help pay for the purchase. The interest rate on the loan is 8%.

(a) What is the margin in Des account when she first purchases the stock?

(b) If the share price falls to $30 per share by the end of the year, what is the remaining margin in her account? If the maintenance margin requirement is 30%, will she receive a margin call?

(c) What is the rate of return on her investment?

(d) How do margin trades magnify both the upside potential and the downside risk of an investment position?

(e) What are the differences between a stop-loss order, a limit sell order, and a market order?