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8 October, 06:57

Lucia bought 800 share of a company's stock for $7.94/share. She pays a broker a commission of $16 to buy and sell stock. After one year, she sold all her shares, which were worth $8.75/share at that time. What was her rate of return?

A. 8.8%

B. 9.3%

C. 9.7%

D. 10.2%

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  1. 8 October, 07:27
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    A: How much did it cost to purchase the stock?

    (# of shares x cost per share)

    (add cost of commission)

    800 x 7.94 = 6352

    6352 + 16 = 6368

    B: Find the net gain or loss.

    (# of shares x selling price per share)

    (commission - selling price)

    (sale of shares - total cost)

    800 x 8.75 = 7000

    7000 - 16 = 6984

    6984 - 6368 = 616

    C: Rate of Return (net gain/total cost)

    616/6368

    = 0.0967 = 9.7%
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