I basically konw the answer but I also need explanations on why the answer is correct. If a question requires a numerical answer, provide a formula that helps to solve it.

RELATIONSHIPS AND ILLUSTRATED FUNDAMENTAL PROBLEMS Relationships 1. An increase in the spread the cost of investing. 2. A reduction in the margin requirement the amount an investor may bor- row to purchase a stock. 3. Buying stock on margin the potential percentage return on an investment and risk. 4. If the price of a stock purchased on margin declines, the percentage loss on the invest- ment 5. If an investor buys a stock on margin and its price subsequently increases, the required amount of margin 6. If the price of a stock rises after an investor sells the stock short, the loss on the transaction 7. If a company raises its dividend, the potential loss on a short position in the stock Fundamental Problems with Worked Solutions In each of the following, the starting price is $50 and the ending price is either $70 or $30 for a change of $20. What is the percentage return for each transaction? (This holding period return should not be confused with the annual return. Holding period returns do not consider how long the investor owned the stock. Annualized rates of return are covered in Chapter 10.) 1. You buy a stock for $50 and sell it for $70. 2. You buy a stock for $50 and sell it for $30. 3. You buy a stock on margin for $50 and sell it for $70; the margin requirement is 60 percent. 4. You buy a stock on margin for $50 and sell it for $30; the margin requirement is 60 percent. 5. You buy a stock on margin for $50 and sell it for $70. The margin requirement is 60 percent, and the interest rate on borrowed funds is 10 percent. 6. You sell a stock short for $50 and repurchase it for $70. 7. You sell a stock short for $50 and repurchase it for $30