Suppose an investor initially pays $10,000 toward the purchase of $15,000 (200 shares @ $75 per share) worth of stock and borrows the remaining $5,000 from a broker.

Complete the balance sheet

Assets		Liabilities and Owners Equity
Value of Stock	$	Loan from broker	$
		Equity	$

What is the initial percentage margin?

If the share price falls to $60 per share, what will the percentage margin be?

Suppose the maintenance margin in 30%, how far could the stock price fall before the investor would get a margin call?

If the interest rate on the loan is 10% and the stock price has risen to $100 one year later, and the stock has paid a $1.50 per share dividend, what is the rate of return on your investment?