Jin buys 100 shares of a stock at $50 per share in his margin account. Refer to Exhibit 11.2 to answer the questions below. (Assume that he incurs no additional costs.)

a. What is his margin requirement in dollars?

b. What is his return on investment if the stock price

rises to $60 per share and he sells his shares?

c. If the stock price decreases to $40 and Jin decides to

sell the stock, what is his return on investment?

Exhibit 11.3 Margin Required on Short Positions

Listed Stock Price

Margin Required

$2.00 or more

150% of market value

$1.50 to $1.99

$3.00 per share

$0.25 to $1.49

200% of market value

Under $0.25

Market value plus $0.25 per share