Suppose you bought 600 shares of a stock at $38.34 using a broker that charged a 1% commission.
A. Find the total cost of buying the stock.
B. If you sold them later at $38.97 using an online brokerage with a $9.95 flat fee, would you have
Made or lost money? How much?
A)a. $23,234.04; b. lost $138.01
B)a. $23,004.00; b. made $378.00
C)a. $23,004.00; b. lost $378.00
D)a. $23,234.04; b. made $138.01

Question

Quizplus · Accepted Answer

A. To find the total cost of buying the stock, we use the formula: 
Total cost = (number of shares x price per share) + commission
Total cost = (600 x $38.34) + (0.01 x 600 x $38.34) 
Total cost = $23,234.04

B. To find the profit or loss from selling the stock, we need to calculate the total selling price and the total commission paid to the online brokerage. 
Total selling price = number of shares x price per share - commission 
Total selling price = (600 x $38.97) - $9.95 
Total selling price = $23,393.05

Total commission paid to the online brokerage = $9.95

Profit or loss = total selling price - total cost - commission paid to both brokerages 
Profit or loss = $23,393.05 - $23,234.04 - $9.95 
Profit or loss = $149.06

Therefore, the answer is D. The investor would have made a profit of $138.01 by selling the stock. A. To find the total cost of buying the stock, we need to calculate the cost of the shares plus the commission charged by the broker.

Cost of shares: 600 x $38.34 = $23,004

Commission: 1% of $23,004 = $230.04

Total cost: $23,004 + $230.04 = $23,234.04

B. To determine if we made or lost money, we need to calculate the selling price minus the total cost of buying and selling the shares.

Selling price: 600 x $38.97 = $23,382

Online brokerage fee: $9.95

Total cost of selling: $9.95 + ($23,234.04 x 0.01) = $258.74

Profit/Loss: $23,382 - $23,234.04 - $258.74 = $-110.78

Since the result is a negative number, we lost money.

Therefore, the correct choice is D.

Suppose You Bought 600 Shares of a Stock at $38