Suppose you open a brokerage account and purchases 300 shares of Internet Dreams at $40 per share. You borrow $4,000 from your broker to help pay for the purchase. The interest rate on the loan is 8%.

a. What is the margin in your account when you first purchase the stock?

b. If the share price falls to $30 per share by the end of the year, what is the remain in margin in your account? If the maintenance margin requirement is 30%, will you receive a margin call?

c. What is the rate of return on your investment?