Suppose that an investor establishes a fully margined long position of 500 shares of firm A at a price of $32 per share. The initial margin is 50 percent and interest on the margin loan is 10 percent annual. Brokerage costs are $10 per transaction.

a. What is the margin in dollars? b. Show the T account immediately after the investor takes the position. Show the calculations for the numbers in the T account. (calcs)

b. If the share price rises to $40 after 4 months, show the T account at that point in time.

c. What is the actual margin at a share price of $40?

d. If the maintenance margin requirement is 30 percent, at what price would the investor receive a margin call?

e. After 6 months, the investor sells the shares for $41. During the holding period, the investor received a dividend of $.80 per share. Considering the round-trip brokerage costs and interest on the margin loan, what was the investors return for the 6-month holding period?

Please show all work for each part for a positive review. Thank you.