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John Lee opens a brokerage account and buys 100 shares of ABC Company at $50 per share. He borrows $1000 from his broker to help
John Lee opens a brokerage account and buys 100 shares of ABC Company at $50 per share. He borrows $1000 from his broker to help pay for the purchase. The interest on the loan is 5%. 1. What is the margin in John's account when he first purchased the stock? (5 points) 2. If the share price falls to $30 per share by the end of the year, what is the margin in his account? If the maintenance margin is 40%, will he receive a margin call? (5 points) 3. What is the rate of return on his investment? (5 points)
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