Simon has borrowed $20,000 on margin to buy shares in ABC Inc., which is now selling at $40 per share. Simons account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $35 per share.

1. a) Will Simon receive a margin call? Show your calculation. (9 marks)

2. b) How low can the price of ABC shares fall before Simon receive a margin call?