Show all work. Label and clearly explain your answer. You must explain how you arrived at your answer in order to get full credit.

Shorty B. Turong buys 100 shares of Rendnil Corporation stock at $66 per share on margin and will sell the shares in one year. He borrows half of the funds needed from his broker at an interest rate of 8% per year. Rendnil Corporation does not pay any dividends.

a. What would Shortys rate of return be if the price of Rendnil shares increases by 20% over the next year?

b. What would Shortys rate of return be if the price of Rendnil shares decreases by 10% over the next year?