Answered

Westonci.ca offers fast, accurate answers to your questions. Join our community and get the insights you need now. Discover precise answers to your questions from a wide range of experts on our user-friendly Q&A platform. Explore comprehensive solutions to your questions from a wide range of professionals on our user-friendly platform.

Question 5. Bob Orleans invested $3,000 and borrowed $3,000 to purchase shares in Verizon Communications. At the time of his investment, Verizon was selling for $47 a share.
o If Bob paid a $30 commission, how many shares could he buy if he used only his own money and did not use margin?
o If Bob paid a $60 commission, how many shares could he buy if he used his $3,000 and borrowed $3,000 on margin to buy Verizon stock?
o Assume Bob did use margin and paid a $60 total commission to buy his Verizon stock. Also, assume he paid another $60 to sell his stock and sold the stock for $54 a share. How much profit did he make on his Verizon stock investment?

Sagot :

The number of shares could he buy is 63.19 and 126.38. Then the profit gained by Bob is $764.68.

What is the profit gained by Bob?

Bob Orleans invested $3,000 and borrowed $3,000 to purchase shares in Verizon Communications.

At the time of his investment, Verizon was selling for $47 a share.

If Bob paid a $30 commission, then the number of shares could he buy if he used only his own money and did not use margin.

[tex]\rightarrow \dfrac{3000- 30}{47}\\\\\rightarrow \dfrac{2970}{47}\\\\\rightarrow 63.19[/tex]

If Bob paid a $60 commission, then the number of shares could he buy if he used his $3,000 and borrowed $3,000 on margin to buy Verizon stock will be

[tex]\rightarrow \dfrac{6000 - 60 }{47}\\\\\rightarrow \dfrac{5940}{47}\\\\\rightarrow 126.38[/tex]

Assume Bob did use margin and paid a $60 total commission to buy his Verizon stock. Also, assume he paid another $60 to sell his stock and sold the stock for $54 a share. Then the profit will be

[tex]\rightarrow (126.38 \times 54 - 60) - (6000)\\\\\rightarrow (6824.68 - 60) - 6000\\\\\rightarrow 6764.68 - 6000\\\\\rightarrow \$764.68[/tex]

More about the profit link is given below.

https://brainly.com/question/15036999

#SPJ1

Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. Thank you for visiting Westonci.ca, your go-to source for reliable answers. Come back soon for more expert insights.