The margin requirement on a stock purchase is 25%. you fully use the margin allowed to purchase 100 shares of msft at $25. if the price drops to $22, what is your percentage loss?

Respuesta :

Thank you for posting your question here at brainly. I hope the answer will help you. Below is the solution:

Loss = (22-25)100 = -300
Amount invested = (.25 x 25) * 100 = 625
Return = -300/625 = -48%

The required percentage loss is 48%.

Loss percentage.

We incur a loss when the selling price of an article is less than the cost price. Thus when (SP) < (CP) then there is a loss.

The given margin requirement is 25%.

The loss per share is,

[tex]25-22=3.00[/tex]

Total loss is,

[tex]3\times 100=300.00[/tex]

Amount invested per share is,

[tex]25\times 0.25=625.00[/tex]

Now, calculating the total return,

[tex]Return=\frac{Total \ loss}{Total\ amount\ invested} \\=\frac{300}{625} \\=48\%[/tex]

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