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You are bullish on Pharma stock. The current market price is $60 per share, and you...

You are bullish on Pharma stock. The current market price is $60 per share, and you have $3,000 of your own to invest. You borrow an additional $3,000 from your broker at an interest rate of 5% per year and invest $6,000 in the stock.
a. What will be your rate of return if the price of Pharma stock goes up by 15% during the next year?
b. How far does the price of Pharma stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately so you don’t pay any interest on your loan.
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