Bill Campbell invested $3,200 and borrowed $3,200 to purchase shares in Kellogg. At the time of his investment, Kellogg stock was selling for $52 a share (a) If Bill paid a $53 commission, how many shares could he buy if he used his $3,200 and borrowed $3,200 on margin to buy Kellogg stock? (Round your answer to 2 decimal places.) Number of shares (b) Assuming Bill did use margin, paid a $92 total commission to sell his Kellogg stock, and sold his stock for $57 a share, how much profit did he make on his Kellogg investment? (Use the number of shares computed in part (a) rounded to 2 decimal places. Round your final answer to 2 decimal places.) Total profit after commissions

Answer:Bill Campbell

a) The number of shares that Bill could buy = 122.06 shares.

b) The total profit after commissions = $465.42

Explanation:a) Data and Calculations:

Investment from own funds = $3,200

Investment on margin = $3,200

Total investment = $6,400

a) If Bill paid a $53 commission, the number of shares that he could buy if he used his $3,200 and borrowed $3,200 on margin to buy Kellogg stock, with Kellogg’s stock selling for $52 a share is:

Total investment = $6,400

Less commission 53

Investment on shares $6,347

Number of shares = 122.06 ($6,347/$52)

b) Sale of stock:

Sales value = $57 * 122.06 = $6,957.42

Total commission = 92.00

Net value from sale = $6,865.42

Cost of investment = $6,400.00

Profit on investment = $465.42