Spiderman opens a brokerage account and purchases 200 shares of Ananse Ltd at GHS20 per share. He borrows GHS1,000 from his broker to help pay for the shares. Interest rate on the loan is 10 percent. The maintenance margin is set at 50%.

Required:

(a) What is the margin in his account when he first purchases the shares? 3 marks

(b) Assume the stock price rises to GHS22 per shares by the end of the year and the stock pays dividend of GH1.55 per share.

i) What is the remaining balance in his margin account? 3 marks

ii) What is the rate of return on his investment? 4 marks