You buy 100 shares of a company stock at $9.75 per share and place the same amount in a savings account earning 4.5% APR. The stock gained 8% in the first year. What is the difference in total value between your stocks and savings account by the end of the first year?

Savings account100 shares x $9.75 = $975, then multiplied by 0.045 will result to $43.89.
Stock100 shares x $9.75 = $975, then multiplied by 0.08 will result to $78.00.
So, the difference between your stocks and savings account by end of the year is $34.11 ($78.00 deducted by $43.89).Your stock is gaining higher APR by $34.11 than what's calculated in your savings account.

Answer Link

adioabiola adioabiola · Answer 2 · 2022-05-18T11:23:15+02:00

The difference in total value between the stocks and savings is; $34.

What is the difference in total value between your stocks and savings account by the end of the first year?

It follows that the initial value of the stocks is; $9.75 × 100 = $975.

It follows from the task content therefore that the value of the stocks at the end of the year is; 1.08 × $975 = $1053

The value of the savings at the end of the year is; $975 × 1.045 = $1019.

On this note, the difference is; $1053 - $1019 = $34.