Question

Mrs. Cowley purchases $32,000 worth of stock on her broker's advice and pays her broker a 0.75% broker fee. She is forced to sell it when it falls to $25,100 two years later, and uses a discount broker who charges $17 per trade. Compute her net loss after the broker fees are taken out.

Answer 1

Answer: $6,320.25

Explanation:

Mrs. Cowley's broker fee is calculated by multiplying the purchase price by the broker fee percentage: $32,000 x 0.0075 = $240. Her total cost for the purchase is then $32,000 + $240 = $32,240. When she sells the stock for $25,100, she incurs another fee of $17 for using the discount broker. To calculate her net loss, we subtract her total cost from her selling price and subtract the two broker fees: $25,100 - $32,240 - $17 - $17 = -$6,320.25, which is rounded to $6,320.25 as a net loss.