Math Problem Statement

Suppose you bought XYZ stock 1 year ago for ​$6.34 per share and sell it at ​$3.28. You also pay a commission of ​$0.35 per share on your sale. What is the total return on your​ investment? Question content area bottom Part 1 The total return is enter your response here​%. ​(Round to the nearest tenth as​ needed.)

Solution

To find the total return on your investment, we need to calculate the net gain or loss per share and then express it as a percentage of the original purchase price.

Step 1: Calculate the net sale price per share

The sale price per share is reduced by the commission paid. So, the net sale price per share is:

Net sale price=Sale priceCommission=3.280.35=2.93\text{Net sale price} = \text{Sale price} - \text{Commission} = 3.28 - 0.35 = 2.93

Step 2: Calculate the total gain or loss per share

The total gain or loss per share is the difference between the net sale price and the purchase price:

Gain/Loss per share=Net sale pricePurchase price=2.936.34=3.41\text{Gain/Loss per share} = \text{Net sale price} - \text{Purchase price} = 2.93 - 6.34 = -3.41

Step 3: Calculate the total return as a percentage

The total return percentage is the gain or loss per share divided by the purchase price, multiplied by 100:

Total return=(3.416.34)×100\text{Total return} = \left(\frac{-3.41}{6.34}\right) \times 100

Let's calculate this:

Total return53.8%\text{Total return} \approx -53.8\%

Final Answer

The total return on your investment is approximately -53.8%.

Would you like further details or have any questions?

Here are some related questions to explore further:

  1. What factors could influence a stock's performance over a year?
  2. How can commissions affect investment returns?
  3. What strategies could minimize investment losses?
  4. What are the differences between realized and unrealized gains or losses?
  5. How can diversification reduce the risk of negative returns?

Tip: Always consider commissions and fees when evaluating investment returns; they can significantly impact your net profit or loss.

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Math Problem Analysis

Mathematical Concepts

Investment Return Calculation
Percentage Calculation
Net Gain or Loss

Formulas

Net Sale Price = Sale Price - Commission
Gain/Loss per Share = Net Sale Price - Purchase Price
Total Return (%) = (Gain/Loss per Share / Purchase Price) × 100

Theorems

-

Suitable Grade Level

Grades 10-12