Bil Campbell invested $5,500 and borrowed $5,500 to purchase shares in Walmart.
ID: 2788695 • Letter: B
Question
Bil Campbell invested $5,500 and borrowed $5,500 to purchase shares in Walmart. At the time of investment, Walmart stock was selling for $50 a share. (a) If Bill paid a $31 commission, how many shares could he buy if he used only his own money and did not use margin? (Round answer to 2 decimal places.) your Number of shares (b) If Bill paid a $59 commission, how many shares could he buy if he used his $5,500 and borrowed $5,500 on margin to buy Walmart stock? (Round your answer to 2 decimal places.) Number of shares (c) Assuming Bill did use margin, paid a $96 total commission to sell his Walmart stock, and sold his stock for $53 a share, how much profit did he make on his Walmart investment? (Use the number of shares computed in part (b) rounded to 2 decimal places. Round your final answer to 2 decimal places.) Total profit after commissionsExplanation / Answer
a) Own Money - $ 5500
Less - Commission Paid $31
Balance Net of Commision $ 5469
Price per Share $ 50
No. of Shares $5469/$50 = 109.38 Shares
b Own Money - $ 5500
Money Borrowed on Margin - $ 5500
Less - Commission Paid $59
Balance Net of Commision $ 10941
Price per Share $ 50
No. of Shares $10941/$50 = 218.82 Shares
c) Number of Shares as computed in part b - 218.82 Shares
Price per share - $ 53
Consideration received - $ 11597.46
Less Commision paid on sale - $ 96
Net Consideration - $ 11501.46
Less : Amount invested - $ 11000
Total Profit after Commision - $ 501.46
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