Suppose that you borrow 6000 to establish your margin account and buy 200 share of E−cola company at the price 60 per share.

(1) If you earn no interest on the funds in your margin account, what will be your rate of return after 1 year if E-cola company is selling at 40, 60 or $80? Assume that E-cola company pays no dividends. (6 scores)

(2) If the maintenance margin is 25%, how low can E-cola company’s price drop before you get a margin call?