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topjm [15]
2 years ago
15

The margin requirement on a stock purchase is 25%. You fully use the margin allowed to purchase 100 shares of MSFT at $25.

Business
1 answer:
loris [4]2 years ago
8 0

Answer:

Return or Percentage Loss=-0.48=-48%

Explanation:

Given Data:

The margin requirement on a stock purchase =25%

Number of shares=100 shares

Price of purchase=$25/ share

Drop in Price=$22

Required:

Percentage loss=?

Solution:

Loss occurred=($22-$25)*100

Loss occurred=-$300

Actual amount at which shares are bought=0.25*($25*100)

Actual amount at which shares are bought=$625

Return or Percentage Loss=\frac{Loss}{Actual \ Amount}

Return or Percentage Loss=\frac{-300}{625} =-0.48

Return or Percentage Loss=-0.48=-48%

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