Lance bought 120 shares of stock at $25.28 per share. Several months later he sold the stock at $24.70 per share. His broker charges 3% commission for round lots and 4% for odd lots. Calculate the gain or loss on the transaction. (Show loss in parentheses)

Question

Quizplus · Accepted Answer

Lance's total purchase cost = 120 shares * $25.28 = $3,033.60. When selling, the total sales amount = 120 shares * $24.70 = $2,964. Since all shares are sold in one transaction, the commission rate is 3% on the entire amount. Commission on sale = 3% of $2,964 = $88.92. Total amount received after commission = $2,964 - $88.92 = $2,875.08. Loss = Purchase cost - Sale amount after commission = $3,033.60 - $2,875.08 = $158.52. However, there was a mistake in calculation; the correct loss calculation should consider the commission on both buying and selling transactions, which was not accounted for in the initial explanation. The correct approach would involve calculating the commission on the purchase as well, but since the commission details provided apply to the sale, and the initial calculation was incorrect, the focus should be on the correct loss calculation based on the given information. The correct loss is actually $259.52, considering the correct calculation method for buying and selling with commissions, which was not accurately represented in the initial response.

Lance Bought 120 Shares of Stock at $25