Question Completion:
Evaluate the two investments, assuming shares of ABC were sold at $10.00 each, while those of DEF were sold at $15 each. Which investments yielded the higher return?
Answer:
Tim Jones
Investment in DEF yielded the higher return of $1,225 (net proceeds) than ABC's return of $1,000.
Step-by-step explanation:
a) Data and Calculations:
Investments in ABC and DEF:
ABC DEF
Investment (shares) 100 100
Unit price of shares $5.25 $6.00
Total investments $525 $600
Selling price per share $10 $15
Sales proceeds $1,000 $1,500
Investment commission ($0) ($275)
Net proceeds from sale $1,000 $1,225
b) The above calculations show clearly that the investment in DEF with a load of $275 yielded the higher returns than investment in ABC with no load. This result suggests that the investment load may not be the only factor for rejecting an investment, but its net proceeds.
