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BUSN 380 Week 4 Problem Set 4
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1. Determining Profit or Loss from an Investment. Three years ago,
you purchased 150 shares of IBM stock for $88 a share. Today, you
sold your IBM stock for $103 a share.
For this problem, ignore commissions that would be charged to buy
and sell your IBM shares.
a. What is the amount of profit you earned on each share of IBM
stock?
b. What is the total amount of profit for your IBM investment?
2. Calculating Rate of Return. Assume that at the beginning of the
year, you purchase an investment for $8,000 that pays $100 annual
income. Also assume the investment’s value has decreased to $7,400
by the end of the year.