Suppose the Xenon (XO) currently is selling at $90 per share. You buy 300 shares, using $20,000 of your own money, and borrow the remainder of the purchase price from your

broker. The rate on the margin loan is 6 percent.

a) What is the rate of return on your margined position (assuming that you invest $15,000 of your own money) if XO is selling after one year at

(1)$98

(2) $90

(3)$82?

What is the relationship between your percentage return and the percentage change in the price of XO? Assume that XO pays no dividends.