Question

A share of stock in the Lofty Cheese Company is quoted at 251/4. Suppose you hold 30 shares of that stock, which you bought at 201/4. If you sell your stock at 251/4, which one of the following statements would be true? A. You'll suffer a loss of $15. B. You'll suffer a loss of $150. C. You'll make a profit of $150. D. You'll make a profit of $15.

Answer 1

Assuming you mean 25+1/4 and 20+1/4, you bought your stock for 20+1/4, so that means your profit (or loss) is (25+1/4)-(20+1/4)=5. SInce you have 30 stocks, 5*30=150=your profit. 

Answer 2

Answer:

C. You'll make a profit of $150.

Step-by-step explanation:

We have been given that a share of stock in the Lofty Cheese Company is quoted at $25\frac{1}{4}$. You hold 30 shares of that stock. You bought the stock at  $20\frac{1}{4}$.

Let us find cost of 30 shares by multiplying cost of each share by 30.

$\text{Cost of 30 shares}=(20\frac{1}{4})\times 30$

$\text{Cost of 30 shares}=(\frac{81}{4})\times 30$

$\text{Cost of 30 shares}=(\frac{81\times 30}{4})$

$\text{Cost of 30 shares}=(\frac{2430}{4})$

Now let us figure out amount earned from selling these stocks.

$\text{Earnings from 30 shares}=(25\frac{1}{4})\times 30$

$\text{Earnings from 30 shares}=(\frac{101}{4})\times 30$

$\text{Earnings from 30 shares}=(\frac{101\times 30}{4})$

$\text{Earnings from 30 shares}=(\frac{3030}{4})$

Since we know that profit is difference between total revenue (earnings) and cost. So we will subtract cost of 30 shares from revenue earned from 30 shares.

$\text{Profit}=\text{Total revenue - Cost}$

$\text{Profit}=\frac{3030}{4}-\frac{2430}{4}$

$\text{Profit}=\frac{3030-2430}{4}$

$\text{Profit}=\frac{600}{4}$

$\text{Profit}=150$

Therefore, you'll make a profit of $150 and option C is the correct choice.