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

Answer:

The Rates of return = 22.83%

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.