The price of Walmart stock is currently $40.2 and you decide to buy 100 shares on margin. The inital margin is 60% and the broker's maintenance margin is 20%. The broker charges an effective interest rate of 6% on the margin loan.

Part 1

How much money do you borrow if you borrow as much as possible?

Part 2

After the 8 months, the stock price has changed to $37.14 and the stock has paid dividends of $1.35 per share. What is the new percentage margin in the account?

Part 3

What is your effective annual return?