Anke Sash, CFA, is a portfolio manager. One day he buys 200 shares of Stock A at the market price of $100 on full margin. The initial margin requirement is 40 percent and the maintenance margin requirement is 25 percent. If the shares of stock later sold for $200 per share, what is the rate of return on this margin transaction for Sash?（ ）
Cash Return%= [(Ending Value/Beginning Equity Position) -1]× 100= [(($200×200)/($100× 200)) -1]× 100= 100%.
Leverage Factor=1/Initial Margin %=1/0.40=2.50.
Margin Transaction Return=All cash return × Leverage Factor=100%×2.50=250%.
Note: You can verify the margin return as follows:
Margin Return %=[((Ending Value-Loan Payoff)/Beginning Equity Position)-1 ]×100=[(([$200×200]-[$100×200×0.60])/($100×0.40×200))-1]×100= [((40000-12000)/8000) -1]×100=250%.