Buy 100 shares at $60 per share, Margin requirement 50%, Maintenance margin 25%, Interest on loan 10% p.a. Assume no transaction costs

Calculate investor's profit/loss in $ AND investor's rate of return in %

i) if price increases by 25% from $60 to $75

ii) if price decreases by 25% from $60 to $45

iii) What conclusion can you make based on the above answers?

What are the advantages of Margin trading?

Answer rating: 100% (QA)

i If the price increases by 25 from 60 to 75 The total cost of buying 100 shares at 60 per share 100 ... View the full answer