Problem 1 (17 pts) Anna and Clara are considering buying 500 shares of stock ABC cach. ABC stock is currently selling for $100. Anna wants to buy the 500 ABC stocks using $30,000 ofher own money and borrowing the remainder amount of the purchase from her broker. Anna's broker will be charging her 8% on the margin loan. Clara wants to buy the 500 ABC stocks by paying the full amount of the purchase from her own money. a. How much money does Clara need to pay in order to purchase the 500 ABC stocks? (Ipt) b. How much money does Anna need to borrow from her broker in order to purchase the 500 ABC stocks? (1 pt) c. What is Anna's initial margin ratio? (2pts) d. If the stock price declines immediately to S70, what will be Anna's new margin ratio? (2pts) e. Given that the minimum margin requirement is a 33% margin ratio. What is the maximum level that stock ABC price can drop into without triggering a margin call? (2pts) f.I Assume that after one year stock ABC price is equal to $120 and stock ABC did not pay any dividend during the year. What will be Anna's return? (2pts) g. Assume that after one year stock ABC price is equal to $120 and stock ABC did not pay any dividend during the year. What will be Clara's return? (2pts) h. Assume that after one year stock ABC price is equal to $80 and stock ABC did not pay any dividend during the year. What will be Anna's return? (2pts) i. Assume that after one year stock ABC price is equal to $80 and stock ABC did not pay any dividend during the year. What will be Clara's return? (2pts) j. Compare Anna's one year returns to Clara's one year retums under the two scenarios (Sanc=S120 and Suc- $80). What can you conclude? (1 pt)