You bought 1,000 shares of Costco (COST) on margin at $60 per share. Your initial margin was 75% and your maintenance margin is 50%. You borrowed at the 9 percent call money rate. You sell Costco (COST) 4 months later for $63. There was a $0.55 dividend paid during your holding period.
a) Calculate the dollar amount of your borrowing.
b) Using your answer to part a), calculate your holding period return.
c) Calculate how far the stock price can fall before you are subject to a margin call. (ignore dividends and the interest due on the loan)