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Six months ago, you purchased 600 shares of stock on margin. The initial margin requirement...

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Finance

Six months ago, you purchased 600 shares of stock on margin. The initial margin requirement on your account is 60% and the maintenance margin is 40%. The call money rate plus the spread is 5%. The purchase price was $15 per share.

#1) How much did you borrow 6 months ago? That is, what is the margin loan?

#2) At what price (P*) would you receive a margin call?

Today, you sold these shares for $17 each.

#3) What is your new margin now?

#4) What is your Effective Annual Return (EAR)?

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