Suppose you are subject to an initial margin of 45% upon purchasing RM 120,000 worth of stock at RM 24 per share, and borrow the remaining from a broker with an interest rate of 6.5% p.a.

a) How much do you pay at the purchase?

b) If the price drops to RM 20 by the end of the year, what is the percentage margin and the return on investment?

c) How much must the price increase to by the end of the year if you wish to earn a return of 50% this year?

d) Suppose the maintenance margin is 30%. How far could the stock price fall before you would get a margin call?