What is meant by buying on margin? Give an example. Mr. Thomas Demo invested in a stock costing 20,000, to which was financed by 12,000 from him, and the remaining amount borrowed from a broker. What is the margin in thei transaction.

Here's the solution for Question 7. Question 7: Mr. Thomas Demo invested in a stock costing 20,000, to which was financed by 12,000 from him, and the remaining amount borrowed from a broker. What is the margin in the transaction. Step 1: Identify the total cost of the investment. The total cost of the stock is \20,000. Step 2: Identify the amount financed by the investor. Mr. Thomas Demo financed \12,000 from his own funds. This is the equity portion of the investment. Step 3: Calculate the margin percentage. The margin is the percentage of the investment that the investor paid for with their own funds. Margin = Amount financed by investorTotal cost of investment × 100\% Margin = (\12,000)/(\20,000) × 100\% Margin = 0.60 × 100\% = 60\% The margin in the transaction is 60\%. Drop the next question!