Question

You invested $5000 of your own money and borrowed $5000 from your broker to purchase shares of a company trading at a share price of $2. You paid 10% interest on your borrowed money for one year. You sold the stock one year later for $1.40. How much money in total did you lose on this transaction including the interest you paid?

Answer 1

lose $2.000

Step-by-step explanation:

with the 5000 you bought 2500 shares (5000/2)

Then the moment you decide to sell them your price drops.

2500 shares for $ 1.40 = $ 3500

which means a loss of = $ 1500

also, interest on the loan must be paid

$ 5000 10% = $ 500

Total loss of operations = 1500 + 500 = $ 2,000