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 $150. B. You'll make a profit of $15. C. You'll make a profit of $150. D. You'll suffer a loss of $15.

Answer 1

The true statement regarding selling stock at 25 1/4, which you bought at 20 1/4, is C. You'll make a profit of $150. You bought 30 shares at 20 1/40. 30 * 20 1/4 = 30 * 81/4 = 2430/4. You sold 30 shares at 25 1/4. 30 * 25 1/4 = 30 * 101/4 = 3030/4. So you earned more than you paid for them. The value you earned is 3030/4 - 2430/4 = (3030-2430)/4 = 600/4 = 150. So, you'll make a profit of $150.