Question

Cynthia’s broker charges her a commission of $88 for every $1000 of stock bought or sold. Cynthia bought 2,000 shares of Ombor Medical Supplies at $35.49 apiece. As the price rose and fell, she sold off part of her holdings. When the price rose to $48.57, she sold 600 shares. The price fell somewhat to $46.10, so she sold 1,150 of her shares. When the price climbed to $53.46, she sold off the remainder of her holdings.

How much profit did Cynthia make in total?

Answer 1

$9,889.82

Explanation:

Nominally, Cynthia paid ...

2000·$35.49 = $70,980

With the broker's commission of 8.8%, she actually paid ...

$70,980·1.088 = $77,226.24

__

When Cynthia sold, she nominally received ...

600·$48.57 +1150·$46.10 +250·$53.46

= $29,142 +53,015 +13,365 = $95,522

Because of the broker's 8.8% commission, she actually received ...

$95,522·0.912 = $87,116.06

Cynthia's total profit was ...

$87,116.06 -77,226.24 = $9,889.82

_____

The broker made $14,652.18 on Cynthia's transactions, almost half again as much as Cynthia made.