Question

2. Sandy made several investments. She bought 1000 shares of a company’s stock for $8.60/share, she bought a bond with a face value of $2500 and a coupon rate of 7%, and she invested $5000 into a fund that is expected to grow by 3.5% per year.
A. Sandy pays a broker a commission of $14 to buy and sell stock. After one year, Sandy sold all her shares, when they were worth $9.15/share. What was her net gain or loss? Show your work.

Answer 1

How much does she pay for 1000 shares @ $8.60/share? How much is the commission on that purchase? The two added together are her "cost basis" for the stock.

When she sells the shares, she receives $9.15/share * 1000 shares, and pays a commission for the sale. The net proceeds (sales price * number of shares - commission) - the cost basis will be the net gain or loss on the stock investment.

Answer 2

how do i calculate commision

Answer 3

Read :-)

"Sandy pays a broker a commission of $14 to buy and sell stock. "

Answer 4

is that a flat fee or is it $14 per ...soemthing

Answer 5

That means she pays $14 for each transaction.

It used to be more common that you would pay a flat fee plus some number of cents per share.

Answer 6

So then how much she pays would be $8,614?

Answer 7

Yes, she pays $8614 for the stock.

Answer 8

When she sells, how much money is credited to her account?

Answer 9

and then what she gets back would be $9,136 . Giving her a profit of$522 . Sound right ?

Answer 10

Yes, that is correct.

Answer 11

net gain of $522.