Question
1. a. A man buys $1,000 worth of stock with $500 of his own money and $500 borrowed from his broker at 6% annual interest.
1.
a. A man buys $1,000 worth of stock with $500 of his own money and $500 borrowed from his broker at 6% annual interest. The stock increases in value, and the man decides to sell it after 60 days for $1,500. The brokers commission to buy and sell is $200. What is the man's total profit? ($430 , $500 , $775 , or $295)
b. A man borrows 100 shares of a stock from his broker and sells them at $28/share (the man also pays a $100 commission). Two weeks later, the stock price drops to $15/share. The man buys 100 shares to return to the stockbroker and pays a $100 commission. What is the man's profit from selling short? ($500 , $1,000 , $1,100 , or $2,700)
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