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John opens a brokerage account and purchases 300 shares Starbucks at $40 per share. He borrows $4000 from his broker to help pay for the purchase. The interest rate on the loan is 8%.

a. What is the margin in John's account when he first purchases stock?

b. If the share price falls to $30 per share by the end of the year, what is the remaining margin in his account?

c. What is the rate of return on his investment?

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Financial Management, Finance

Category:- Financial Management
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