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7 July, 01:33

Julie Martin bought stock for $3,000, using $2,000 of her own money and $1,000 borrowed from the broker. One month later, the stock is sold for $3,850. Interest owed to the broker is $15; brokerage commissions to buy and sell the stock totaled $150. Rates of return: %

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  1. 7 July, 05:02
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    The Rates of return = 22.83%

    Explanation:

    The stock that is bought by Julie Martin = $3000

    Own money used to buy = $2000

    Borrowed money = $1000

    Interest on borrowed money = $15

    Brokerage commissions = $150

    The stock is sold after one month = $3850

    Now first calculate the net profit = Selling price of stock - cost price of stock - Interest on borrowing - commission

    = 3850 - 3000 - 15 - 150

    = 685

    Now calculate the rate of return = Net profit / cost of stock

    = 685 / 3000

    = 0.2283 or 22.83 percent.
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