Megan bought 200 shares of stock at a price of $10 a share. She used her 70% margin account to make the purchase. She sold her shares after a year for $12 a share. Ignoring margin interest and trading costs, answer all of the questions:

1. How much money did Megan need to put into the account before she can borrow from the broker to make the purchase? How much can she borrow from the broker?

2. After the purchase, the stocks price increased from $10 to $12, what would be Megans new margin position (ratio)?

3. What is her dollar returns if she sells the stock at this new price? And what would be her percentage return on this investment?

4. Suppose Megan foresaw the stock price would decline in the next year. So, instead of buying it, she short sold short 200 shares of the stock at $10. In order to do this, she was required to use her 70% margin account. What is her dollar return if the stock price increased to $12?