Question

Tom bought 750 shares of a company’s stock for $11.06/share. He pays a broker a commission of $12 to buy and sell stock. After one year, Tom sold all his shares, when they were worth $10.24/share. How much did it cost Tom to buy the stock? Show your work. What was Tom’s net gain or loss? Show your work. What was Tom’s annual rate of return? Show your work.

Answer 1

Answer:

-7.692%

Step-by-step explanation:

a.)Buying: total cost

Total cost= commission + (price per share* # of shares ) ;

Total cost= 12 + (11.06*750)= 12+8295 = $8,307

b.)Net gain or loss;

First, find cash received from sale of stock and deduct commission;

Cash from sale =10.24 * 750= 7,680

deduct commission= 7680-12= $7,668

Gain or loss= sale-cost = 7668-8307 = -$639, meaning there is a loss.

c.) Annual rate of return= (net gain or loss/amount paid)*100%

return= -639/(8307)*100 = -7.692%

Explanation: