Buy 100 shares at $60 per share, Margin requirement 50%, Maintenance margin 25%, Interest on loan 10% p.a. Assume no transaction costs.

Calculate investors profit/loss in $ AND investors rate of return in %

i) if price increases by 25% from $60 to $75

ii) if price decreases by 25% from $60 to $45

iii) What conclusion can you make based on the above answers?

iv) What are the advantages of Margin trading?