Question

Lucia bought 800 share of a company's stock for $7.94/share.She pays a broker a commission of $16 to buy and sell stock. After one year,she sold all her shares, which were worth $8.75/share at that time. What was her rate of return?
A. 8.8%
B. 9.3%
C.9.7%
D.10.2%

Answer 1

A: How much did it cost to purchase the stock?
(# of shares x cost per share)
(add cost of commission)
800 x 7.94 = 6352
6352 + 16 = 6368

B: Find the net gain or loss.
(# of shares x selling price per share)
(commission - selling price)
(sale of shares - total cost)
800 x 8.75 = 7000
7000 - 16 =6984
6984 - 6368 = 616

C: Rate of Return (net gain/total cost)
616/6368
= 0.0967 = 9.7%