Suppose that Intel currently is selling at $20.00 per share. You buy 1,000 shares using $15,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8%.

A) What is the percentage increase in the net worth of your brokerage account if the price of Intel immediately changes to: (i) $22.00; (ii) $20.00; (iii) $18.00? What is the relationship between your percentage return and the percentage change in the price of Intel?

B) If the maintenance margin is 25%, how low can Intels price fall before you get a margin call?

C) How would your answer to question b change if you had financed the initial purchase with only $10,000 of your own money?

D) What is the rate of return on your margined position (assuming again that you invested $15,000 of your own money) if Intel is selling after one year at: (i) $22.00, (ii) $20.00, (iii) $18.00? What is the relationship between your percentage return and the percentage change in the price of Intel? Assume that Intel pays no dividends.

E)Continue to assume that a year has passed. How low can Intels price fall before you get a margin call?