1. You paid cash for $1,300 worth of stock a year ago. Today the portfolio is worth $1,888.

1. What rate of return did you earn on the investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

2. Now suppose that you bought the same stock but bought it on margin. The initial margin requirement was 75%. Recalculate your rate of return, ignoring any interest due. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

3. Recalculate the rates of return for a cash purchase in the event that the stock is worth $925 today. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

4. Recalculate the rates of return for a margin purchase in the event that the stock is worth $925 today. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

5. What can we conclude from the last two questions?