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=[tex]\frac{Loss}{Actual \ Amount}[/tex]
Return or Percentage Loss=[tex]\frac{-300}{625} =-0.48[/tex]
Return or Percentage Loss=-0.48=-48%
