Bob Orleans invested $3,000 and borrowed $3,000 to purchase shares in Verizon Communications. At the time...

Bob Orleans invested $3,000 and borrowed $3,000 to purchase shares in Verizon Communications. At the time of his investment, Verizon was selling for $16 a share.

a. If Bob paid a commission of $40, how many shares could he buy if he used only his own money and did not use margin?

b. If Bob paid a commission of $80, how many shares could he buy if he used his $3,000 and borrowed $3,000 on margin to buy Verizon stock?

c. Assume Bob did use margin and paid a commission of $80 to buy his Verizon stock. Also, assume he paid another $80 to sell his stock and sold the stock for $22 a share. How much profit did he make on his Verizon stock investment? (Use the rounded number of shares computed in part b. Round your answer to 2 decimal places.)

Expert Solution

jeff jeffy answered 6 months ago

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