Question

Joe worked all summer and saved $4,000. He wants to buy shares of XYZ Corporation, which is currently trading at $22.50 per share. How many shares can he buy if the stockbroker charges him $50 to execute the trade?

Answer 1

Joe can buy 175 shares of XYZ Corporation with his savings and the transaction fee.

Step-by-step explanation:

To calculate the number of shares Joe can buy, we need to first subtract the transaction fee from his savings. In this case, the transaction fee is $50. So, Joe's remaining savings will be $4,000 - $50 = $3,950.

Next, we divide the remaining savings by the current price per share to find the number of shares Joe can buy. Joe can buy $3,950 / $22.50 = 175.56 shares.

Since we can't purchase a fraction of a share, Joe can buy a maximum of 175 shares of XYZ Corporation with his savings and the transaction fee.