Question

What is the rate of return when 40 shares of StockA, purchased for $15/share, are sold for $690? Thecommission on the sale is $6.Rate of Return = = [?] %

Answer 1

The rate of return when 40 shares of StockA, purchased for $15/share, are sold for $690 with a $6 commission is 14%.

Step-by-step explanation:

To calculate the rate of return for the given scenario, we first need to determine the total initial investment and the total amount received from the sale after commission. The student purchased 40 shares of StockA at $15 per share, resulting in a total investment of:

40 shares × $15/share = $600

When the stock is sold for $690, there is a commission of $6, which means the net amount received from the sale is:

$690 - $6 = $684

The net profit is the difference between the sale proceeds and the purchase cost:

$684 (sale proceeds) - $600 (purchase cost) = $84

To find the rate of return, divide the net profit by the initial investment and multiply by 100 to get a percentage:

(Net Profit / Initial Investment) × 100 = Rate of Return

($84 / $600) × 100 = 14%

Therefore, the rate of return when the shares are sold for $690 with a $6 commission is 14%.

Answer 2

To determine the return we need to first determine how much was spent on the stocks. We have 40 stocks, each bought for 15, so we need to multiply the total number of stocks by the price of each:

`Price=40\cdot15=600`

The return on the stocks is the price for which they were sold minus the price for which they were bought minus the commission.

`\text{ Return =}690-600-6=84`

The total return was $84, now we need to calculate the percentage. To do that we have to divide the return by the price and multiply it by 100.

`\text{ Rate of return = }(84)/(600)\cdot100=14\text{ \%}`

The rate of return on these stocks is 14%.