Use the following information for parts A to B.

Mr. Smiths investment return for last year was 12% (nominal return). Inflation rate for the same period was 2.4%. Mr. Smith has to pay 35% tax on his investment return.

A.Calculate the after-tax real rate of return of Mr. Smiths investment?

B.Suppose Mr. Smith requires an after-tax real rate of return of 11.8%, Calculate the before tax nominal return rate Mr. Smith should look for.

C.Mr. Jones buys 6,000 shares of stock AA at the price of $120 per share on margin. He pays 30% of the total cost and borrows the rest from his stock broker. If the maintenance margin is 20%, at what stock price level will the maintenance margin level be reached?

D.Explain what a stop sell order is. Give an example.

E.What view would the investor have on the stock price if he places a stop sell order to sell stocks?