Question

1. Anci wants to determine whether her investments have generated a capital gain over the past year. Investment Basis Commission Paid to Purchase Commission Paid to Sell Current Price Acme Co. $2,000 $ 50 $50 $2,200 Lemonade Inc. $2,000 $100 $0 $2,000 Pencil Corp. $1,500 $50 $50 $2,000
1.a. Using the information above, calculate the gain or loss for each investment individually.
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1.b. Using the information above, calculate the total capital gain or loss for her total portfolio of assets (all combined).
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1.c. Using the information above, calculate the percentage gain or loss on each investment individually.
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2. Jamie has just opened a bank account that pays 2.5% interest annually. If the account requires a minimum balance of $500 and Jamie maintains her initial deposit of $3,200 for the next 12 months, how much interest will be earned at the end of the 12-month period?
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3. Diane is depositing $12,000 in a 9-month CD that pays 5% interest annually. How much interest will Diane have earned if she holds the CD until maturity?
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Answer 1

Given,

Investment	Basis	Commission paid for purchase	Commission paid for sell	Current Price
Acme	2000	50	50	2200
Lemonade	2000	100	0	2000
Pencil	1500	50	50	2000

Answer 1.a) Gain = Current Price - Basis - Commission paid to purchase - Commission paid to sell

Acme Gain = 2200 - 2000 - 50 - 50 = 100

Lemonade Loss = 2000 - 2000 - 100 = -100

Pencil Gain = 2000 - 1500 - 50 - 50 = 400

Answer 1.b) From above individual gain if we can all gain and loss, one will get portfolio gain.

Acme Gain = 100

Lemonade loss = -100

Pencil gain = 400

Portfolio capital gain = 100 - 100 + 400 = 400

Answer 1.c) % gain = gain/ Basis

Acme gain in % == 100/2000 = 5%

Lemonade loss in % = -100 / 2000 = -5%

Pencil Gain in % = 400/1500 = 26.67%

Answer 2) Interest on bank account = 2.5% annually

Jamies has maintained $3200 for next twelve months hence he is entitled to receive whole interest

Interest = Principal * Interest Rate = 3200 * 2.5% = 32 + 32 + 16 = 80