1) An investor purchases 500 shares of ABC stock on margin a

1) An investor purchases 500 shares of ABC stock on margin a

1) An investor purchases 500 shares of ABC stock on margin at a price of $35 per share. Assume an initial margin requirement of 45% and annual interest on margin loans of 12%. Over the next year ABC stock rises to $40. What is the return on the investment?2) Explain the difference between the role o…