Question

What is the rate of return when 10 shares of Stock
A, purchased for $30/share, are sold for $380? The
commission on the sale is $6.
Rate of Return= [?]%
Give your answer as a percent rounded to the
nearest tenth.

Answer 1

Answer:

Rate of Return = 24.7%

Step-by-step explanation:

Given 10 shares of Stock A are purchased for $30/share:

$\sf \implies Initial \; value = \ 30 \times 10 = \ 300$

The current value, after deducting the commission:

$\implies \sf Current \; value = \ 380 - \ 6 = \ 374$

A rate of return is the net gain (or loss) of an investment over a specified time period, expressed as a percentage of the investment's initial cost.

$\boxed{\sf Rate\;of\;return=\dfrac{Current \; value - Initial \; value}{Initial \; value} \times 100}$

Therefore:

$\sf \implies Rate\;of\;return=\dfrac{\ 374-\ 300}{\ 300} \times 100$

$\sf \implies Rate\;of\;return=\dfrac{\ 74}{\ 300} \times 100$

$\sf \implies Rate\;of\;return=0.2466666...\times 100$

$\sf \implies Rate\;of\;return=24.7\%\;\;(nearest\;tenth)$