Question

Julie Martin bought stock for $3,000, using $2,000 of her own money and $1,000 borrowed from the broker. One month later, the stock is sold for $3,850. Interest owed to the broker is $15; brokerage commissions to buy and sell the stock totaled $150. Rates of return: %

Answer 1

21.64%

Step-by-step explanation:

First you would want to take the total cost of buying the stock and add it up.

1000+2000+15+150=3165

After this you would take the price at which it was sold ($3850) and subtract 3165 from it.

3850-3165=685

$685 is the total profit.

Finally you would take the total profit and divide it by the total cost.

685/3165=0.2164297

This gives you the final Rates of Return of 21.64%

Answer 2

The Rates of return = 22.83%

Step-by-step explanation:

The stock that is bought by Julie Martin = $3000

Own money used to buy = $2000

Borrowed money =$1000

Interest on borrowed money = $15

Brokerage commissions = $150

The stock is sold after one month = $3850

Now first calculate the net profit = Selling price of stock – cost price of stock – Interest on borrowing – commission

= 3850 – 3000 – 15 – 150

= 685

Now calculate the rate of return = Net profit / cost of stock

= 685 / 3000

= 0.2283 or 22.83 percent.