Question

Alex decides to invest in the stock of company Z by purchasing 1,000 shares at $2.35 per share. After a short while, the stock rises to $2.68 per share, at which point Alex decides to sell, realizing a profit. As a result of the sale, Alex must pay his stockbroker a fee, calculated as 5% of the profit on the investment. Calculate Alex's pre-tax profit (i.e. Total profit on the investment minus the broker fees). Give your answer in dollars and cents.

Answer 1

$313.50

Explanation:

The stocks were worth $2.35 per share when Alex bought them. The stock rose to $2.68 per share. Subtract the two value to find the amount gained per share.

2.68 - 2.35 = 0.33

Alex gained $0.33 per stock. Multiply this number by 1000 since that is how many shares he has.

0.33 × 1000 = 330

Alex made $330 from stocks. He must now pay his stockbroker a fee of 5%. Take 5% of 330 and subtract it from 330.

5% = 0.05

330 × 0.05 = 16.5

330 - 16.5 = 313.5

Alex's pre-tax profit is $313.50.