Answer:
The rate of return is 6.5% .
Step-by-step explanation:
As given
Phil bought 700 shares of a company’s stock for $9.29/share.
He pays a broker a commission of $18 to buy and sell stock.
After one year, he sold all his shares, which were worth $9.90/share at that time.
Cost price of the 700 shares of a company = 700 × Cost per share + Commission cost .
Cost price of the 700 shares of a company = 700 × 9.29 + 18
= 6503 + 18
= $ 6521
Selling st price of the 700 shares of a company = 700 × Cost per share + Commission cost .
Selling st price of the 700 shares of a company = 700 × 9.90 + 18
= 6930 + 18
= $ 6948
[tex]Rate\ of\ return = \frac{(Selling\ price\ of\ the\ 700\ shares-Cost\ price\ of\ the\ 700\ shares)\times 100}{Cost\ price\ of\ the\ 700\ shares}[/tex]
Put all the values in the above
[tex]Rate\ of\ return = \frac{(6948 - 6521)\times 100}{6521}[/tex]
[tex]Rate\ of\ return = \frac{427\times 100}{6521}[/tex]
[tex]Rate\ of\ return = \frac{42700}{6521}[/tex]
Rate of return = 6.5%
Therefore the rate of return is 6.5% .
