1. You just bought $8,000 worth of a stock priced at $40 per share using 50% initial margin. The broker charges 6% on the margin loan and requires a 30% maintenance margin. a. At what price would you expect to get a margin call? b. To restore your margin to the initial margin level, how much would you need to deposit?
2. When you retire you are offered a pension of 2,000 per month for 20 years or a lump sum payment. At an interest rate of 5%, what should the value of the lump sum be?