You want to purchase Apple shares at the current trading price of $125 per share. You have $20,000 to invest and the initial margin requirement is 50%. You want to make as much investments as possible in Apple stocks. The maintenance margin is 35%. The loan rate is at 2% per year.

1.) If Apple share price falls to $100 per share in one year, how much is the percentage margin?

At P0 =$125

Maximum investment in the stocks (including using your equity and borrowed fund) =

Number of shares purchased =

Borrowed funds for your investment=

At P1=$100

Market value of stocks (total investment value by end of year one) =

Equity value at new price =

Percentage margin =

what is the rate of return