Answer:
Average price = $16.56
Explanation:
The weighted average price is the average value of a group of shares bought and different points in time and at different prices.
It is the average value that considers the proportion of each share (weight) purchased at a particular price when computing the average price of a group of shares. The implication of this method of computing average is simply that shares with higher quantity (weight) will have their prices more represented than those with lower quantity.
This average price is useful to evaluate and track the performance of an investment that is made of series of transactions by comparing the average price to the market price.
To calculated the weighted average price, we multiply the quantities of shares purchased by their respective prices and sum all together and then divide by the total quantity of shares.
We can apply this to the question
Weighted average price = ( (1300× $17) +( 900× $12) + ( 800× $21))/3,000
= 49,700/3,000
= $16.56
Note 800 in bold is the balance of shares as stated in the question which is 3000 - (1300+ 900) = 3,000- 2,200 = 800.
