Investor A makes a cash purchase of 100 shares of AB&C common stock for $45 a share. Investor B also buys 100 shares of AB&C but uses margin. Each holds the stock for one year, during which dividends of $4 a share are distributed. Commissions are 4 percent of the value of a purchase or sale; the margin requirement is 50 percent, and the interest rate is 8 percent annually on borrowed funds.
a. What is the percentage earned by investor A if he or she sells the stock after one year for $30? Round your answer to one decimal places.
b. What is the percentage earned by investor B if he or she sells the stock after one year for $30? Round your answer to one decimal places.