Question

4. Marlene purchases dollars worth of stock on her broker's advice and pays her

broker a 1.5% broker fee. She sells her stock when it increases to y dollars two
years later, and uses a discount broker who charges $21 per trade.
A. Express Marlene's net proceeds algebraically.

Answer 1

y - 1.015x - 21

Explanation:

Given that:

Let worth of stock = x

Broker fee = 1.5% of x = 0.015x

Total cost incurred to purchase stock = x + 0.015x = 1.015x

Worth of stock after 2 years = y

Broker fee = $21 per trade :

Amount Realized from sale = y - $21

Net proceed = Amount Realized from sale - cost incurred to purchase

= (y - 21) - (1.015x)

= y - 21 - 1.015x

= y - 1.015x - 21