Question

What is the rate of return when 10 shares of Stock

A, purchased for $30/share, are sold for $380? The
commission on the sale is $6.
Rate of Return= [?]%
Give your answer as a percent rounded to the
nearest tenth.

Answer 1

Rate of Return = 24.7%

Explanation:

Given 10 shares of Stock A are purchased for $30/share:

`\sf \implies Initial \; value = \$30 * 10 = \$300`

The current value, after deducting the commission:

`\implies \sf Current \; value = \$380 - \$6 = \$374`

A rate of return is the net gain (or loss) of an investment over a specified time period, expressed as a percentage of the investment's initial cost.

`\boxed{\sf Rate\;of\;return=(Current \; value - Initial \; value)/(Initial \; value) * 100}`

Therefore:

`\sf \implies Rate\;of\;return=(\$374-\$300)/(\$300) * 100`

`\sf \implies Rate\;of\;return=(\$74)/(\$300) * 100`

`\sf \implies Rate\;of\;return=0.2466666...* 100`

`\sf \implies Rate\;of\;return=24.7\%\;\;(nearest\;tenth)`