If you invest $1,000 in a day trade and make $20, what is your approximate profit margin?

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Multiple Choice

If you invest $1,000 in a day trade and make $20, what is your approximate profit margin?

Explanation:
Profit margin reflects how much of your invested capital you’ve earned as profit. It’s calculated by dividing the profit by the amount invested and multiplying by 100 to get a percentage. Here, profit is $20 on an investment of $1,000. So (20 ÷ 1000) × 100 = 0.02 × 100 = 2%. The other figures would require different profit amounts: 0.2% would be $2 on $1,000, 20% would be $200, and 200% would be $2,000. So the approximate profit margin is 2%.

Profit margin reflects how much of your invested capital you’ve earned as profit. It’s calculated by dividing the profit by the amount invested and multiplying by 100 to get a percentage. Here, profit is $20 on an investment of $1,000. So (20 ÷ 1000) × 100 = 0.02 × 100 = 2%.

The other figures would require different profit amounts: 0.2% would be $2 on $1,000, 20% would be $200, and 200% would be $2,000. So the approximate profit margin is 2%.

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