A. Margin Trading (continued)
- d. Suppose after 1 year the stock has a sales price of $40/share.
- Profit = $3200 - $2300 - $2000 = -$1100
- Return = -$1100/2000 = -55%
*Notice the return and loss are magnified by margin use. Also notice that the downside loss potential is greater than the upside gain potential.