Question

You have a ​$106 comma 000 portfolio comprising 10 stocks. You trade each stock five times this year and each time you​ trade, you pay about ​$29 in commissions and spread. You have no special​ knowledge, so you earn only the average market return of 14​% on your investments. How much lower will your total return be because of your​ trades?

Answer 1

Answer:

My return will be 1.37% lower.

Explanation:

Total expenditure:

= Number of stocks×Number of times×Commission and spread per trade

= 10×5×$29

= $1,450

In % form:

= $1,450/$106,000

= 1.37%

My return will be 1.37% lower.