Answer:
1. $1400
2 329.4 shares
3. $350
4. 1.25
Step-by-step explanation:
1. if Tim does not buy DEF, how many can he spend on ABC?
From the attached image
100 shares for ABC = $425
100 shares for DEF $600 + $375 commission
Therefore, the amount he can spend on ABC without buying DEF = $600 + $375 + $425 = $1400
2: how many shares of ABC can he buy if he does not buy DEF?
$425 = 100 shares
$1400 =
Cross Multiply
= $1400 × 100 shares/ $425
= 329.41176471 shares
= 329.4 shares
3: if the selling price is $1,750, how much will Tim have earned by investing?
The cost of buying ABC = $1400
The Amount earned from investing = $1750 - $1400
= $350
4: what is the total return divided by the total cost In this example?
Total return = $1750
Total cost = $1400
= $1750/$1400
= 1.25
