Suppose that Intel currently is selling at $40 per share. You buy 500 shares,

using $15,000 of your own money and 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) $44; (ii) $40; (iii) $36?

b) If the maintenance margin is 25%, how low can Intel's price fall before you get a

margin call?

c)What is the rate of return on your margined position if Intel is selling after one year at (i) $44; (ii) $40; (iii) $36?

e) Continue to assume that a year has passed. How low can Intel's price fall before you get a margin call?