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2 . Given the following two investments, use a graph to illustrate the impact of leverage on an investor s gains and losses ( ignoring

2.Given the following two investments, use a graph to illustrate the impact of leverage on an investors gains and losses (ignoring borrowing costs for simplicity).
a.Grace invests 5,000 of her savings in the shares of a high-tech company. She buys the shares when they cost 50 per share, and so owns 100 shares. What is the value of Graces investment if the shares increase in value to 55 per share or fall in value to 45 per share? What is Graces percentage gain or loss?
b.Jack has 1,000 in savings but also wishes to buy 100 shares in the same high-tech company. He borrows 4,000 and buys 100 shares at 50 per share. What is Jacks percentage gain or loss if the share price increase to 55 or falls to 45 per share?

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