The shares of Salford Ltd are selling for 55 per share. Ruth is considering buying 1,000 shares of Salford Ltd. Her broker demands brokerage commissions of 2% for purchases and 2% for sales; initial margin deposit of 60% and a maintenance margin of 25%. The interest rate on margin debt is 4% per year. a. Assuming that Ruth paid the full cost of the purchase and the company paid dividends of 0.80 per share during the year, what is her rate of return if at the end of the year she sells the shares for: i. 60 per share? ii. 50 per share? b. Now, assume that Ruth bought the 1,000 shares on a margin account and the company paid dividends of 0.80 per share during the year. What is her rate of return if at the end of the year she sells the shares for: i. 60 per share? ii. 50 per share? c. If Ruth purchases the 1,000 shares on a margin account, making the initial margin deposit of 60%, at what share price would she receive a margin call from the broker? d. Now, instead of buying the shares John decided to short sell 1,000 shares of Salford Ltd. Brokerage commissions and margin requirements on short-sales are the same as above but the interest on margin debt for short sales is 6% per annum. While John is short, Salford Ltd paid dividends of 0.80 per share. What is Johns rate of return if at the end of one year he buys Salford Ltd shares to cover his short sale at: i. 60 per share? ii. 50 per share? e. Differentiate between buying a security on a margin and selling a security short. When would an investor consider using each of these strategies?