Homework Answers
30%
Initial value of stock purchased on 50% margin = 1,000*20 = $20,000
Stock value if prices rises to $23 = 1,000*23 = $23,000
Total Profit = 23,000-20,000 = $3,000
Your initial investment = $10,000
Thus, Profit margin = 3,000/10,000 = 30%
Please note: There is no borrowing cost thus all profit goes to investor.
Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.
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