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The margin requirement on a stock purchase is 25%. you fully use the margin allowed to purchase 100 shares of msft at $25. if the price drops to $22, what is your percentage loss?

Verified Answer :

Thank you for posting your question here at brainly. I hope the answer will help you. Below is the solution:

Loss = (22-25)100 = -300
Amount invested = (.25 x 25) * 100 = 625
Return = -300/625 = -48%

The required percentage loss is 48%.

Loss percentage.

We incur a loss when the selling price of an article is less than the cost price. Thus when (SP) < (CP) then there is a loss.

The given margin requirement is 25%.

The loss per share is,

\(25-22=3.00\)

Total loss is,

\(3\times 100=300.00\)

Amount invested per share is,

\(25\times 0.25=625.00\)

Now, calculating the total return,

\(Return=\frac{Total \ loss}{Total\ amount\ invested} \\=\frac{300}{625} \\=48\%\)

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