Hi Tutor,

I'm struggle with this question. Don't understand with this. Need your help and I would be appreciate for your explanation.

Problem 1: You purchase 100 shares for $50 a share ($5,000), and after a year the price rises to $60. What will be the percentage return on your investment if you bought the stock on margin and the margin requirement was: (a) 25 percent, (b) 50 percent, and (c) 75 percent? (Ignore commissions, dividends, and interest expense.)

Problem 2:

• RepeatProblem1todeterminethepercentagereturnonyourinvestmentbutinthiscase,supposethepriceofthestockfallsto$40pershare.WhatgeneralizationcanbeinferredfromyouranswerstoProblems1and2?

Thank you for your help,

Michelle