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You Buy 100 Shares of Stock at $40 Per Share

question 65

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You buy 100 shares of stock at $40 per share on margin of 40%. If the price of the stock rises to $60 per share, what is your percentage gain in equity? Disregard interest costs.


Definitions:

Interest Rate

The cost incurred by a borrower from a lender for utilizing assets, shown as a percentage of the principal sum.

Discount Rate

The interest rate used to discount future cash flows to their present value, often used in investment and financial analysis.

Present Value

The current worth of a future sum of money or stream of cash flows given a specific rate of return.

Discount Rate

The discount rate is the interest rate used to determine the present value of future cash flows in discounted cash flow analysis.

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