Thomas bought 150 shares of stock for $40.00 per share on 70% margin.

Assume he holds the stock for at least one year and that his interest costs will be 10% for the debit position in total over the holding period. He also received dividends amounting to $0.45per share.

Assume a Maintenance Margin of 35%. No commissions paid.

1. Compute the actualGain or Lossif the market price increases to $70 a share.

2. Based on question 1 answer, compute now the Return On Invested Capital

3. Based on question 1 and 2, now

a. Compute the Actual Margin

b. Would the investor received a:

i. A Margin Call or Restricted Account. Explain why yes or no.

4. Now, compute gain or loss assuming the original exercise and that the Market share price decreases to $10 a share a.

a. ComputeReturn on Invested Capital if he sells the stock for $10 a share.