## Calculate buying on margin amount borrowed, return on investment, and margin call.

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### Margin Call

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• Buying on margin is when an investor invests with borrowed money, which amplifies both gains and losses.

Formulas:

Amount borrowed =
 Initial Equity Investment Initial Equity Percentage
- Initial Equity Investment
Shares purchased =
 Initial Equity Investment + Amount Borrowed Initial Share Price

Capital gain = Shares Purchased x (Ending Share Price - Initial Share Price)

Dividends = Shares Purchased x Cash Dividends During Hold Per

Interest on margin loan = Amount Borrowed x
 Holding Period in months 12
x Margin Loan Rate (%)

Net Income = Capital Gain + Dividends - Interest on Margin Loan

ROI =
 Net Income Initial Equity Investment
x 100
Margin Based on Ending Price =
 (Shares Purchased x Ending Share Price) - Amount Borrowed Shares Purchased x Ending Share Price
x 100
Price for Margin Call =
 Amount Borrowed Shares Purchased - (Maintenance Margin x Shares Purchased)
Return on Shares without Margin =
 Ending Share Price - Initial Share Price + Cash Dividends During Hold Per Initial Share Price
x 100