Question

what will be the percentage return on your investment if you bought the stock on margin and the margin requirement was 25 percent

Answer 1

Answer: 80%

Step-by-step explanation:

If the margin requirement was 25% then the amount of cash you invested is;

= Total value * margin requirement

= 5,000 * 25%

= $1,250

The price increased to $60 and now you have $6,000.

The return is;

= (New Price - Old Price) / Invested amount

= (6,000 - 5,000) / 1,250

= 80%